According to the Canadian Real Estate Association (CREA) for May 2025, home sales across Canada posted a monthly gain for the first time since late 2024. National sales activity increased 3.6% from April, driven by momentum in markets such as Toronto, Calgary, and Ottawa. While sales were still down 4.3% from the same time last year, the pickup in monthly numbers suggests renewed engagement from both buyers and sellers.

● National home sales rose 3.6% month-over-month in May
● New listings were up 3.1% compared to April
● Average home price was $691,299, down 1.8% year-over-year
● The MLS Home Price Index fell just 0.2% month-over-month
● The sales-to-new listings ratio (SNLR) held steady at 47%
● Inventory remains below the long-term average, with 4.9 months of supply nationally

Price Trends Show Signs of Stabilizing

The national average sale price remained under pressure on a year-over-year basis but has shown signs of levelling off month-to-month. The MLS Home Price Index declined only 0.2% from April, compared to monthly drops of nearly 1% in previous months. While affordability remains stretched in many major centres, particularly in Southern Ontario and parts of British Columbia, other regions are faring better. Markets in the Prairies and Atlantic Canada, as well as those in Quebec City, have shown greater resilience.

Listings Rebound as Sellers Re-Enter the Market

The number of new listings rose 3.1% month-over-month, which helped bring the total active listings to just under 202,000 properties. Although that’s still about 5% below the long-term average for May, it reflects a 13.2% increase over the same month last year. Sellers appear more confident this spring, especially as earlier volatility tied to trade tensions with the US has somewhat settled. An increase in listings, paired with a balanced sales-to-new listings ratio (SNLR), signals healthier market dynamics heading into summer.

Demand Reawakens Despite Headwinds

While the economic backdrop remains uncertain, especially with high borrowing costs and lingering affordability concerns, there are signs of cautious optimism. Shaun Cathcart, CREA’s Senior Economist, notes that earlier disruptions may have simply delayed activity. Markets such as Toronto, Ottawa, Calgary, and Saskatoon are experiencing more substantial transaction volumes after a sluggish start to 2025. Still, experts warn that confidence remains fragile, especially in the absence of a clear path for rate cuts from the Bank of Canada.

Balanced Conditions Dominate the National Picture

With 4.9 months of inventory and a sales-to-new-listings ratio (SNLR) just under 50%, the national housing market is in broadly balanced territory. Buyer demand is recovering, but there is little urgency as many households await more affordable mortgage rates. Meanwhile, prices are no longer falling steeply, but they’re not rising either. This suggests a stable but cautious market, where even slight shifts in rates or economic confidence could alter momentum either way.

Impact on Canadian Mortgages and the Bank of Canada’s Monetary Policy

The modest rise in home sales and the stabilization of prices in May suggest a potential inflection point in market activity. However, the lack of affordability gains and persistently higher mortgage rates mean that the Bank of Canada is unlikely to shift course prematurely. For homebuyers, this environment offers more negotiating power without the fear of bidding wars, especially in high-priced regions. Renewers may find their payment shock easing slightly if fixed rates hold or drift lower, while refinancers are likely to remain on the sidelines until rates improve or equity grows. If confidence builds through the summer, we could see upward pressure on housing again, which would complicate the Bank of Canada’s timeline for rate cuts, especially if inflation flares back up.

---

Canadian Rents Cool from Record Highs, But the Spring Bump Is Back

According to the June 2025 Rentals.ca and Urbanation National Rental Report, the average asking rent in Canada was $2,129 in May, marking a 3.3% year-over-year decline. This marks the eighth consecutive annual decrease, yet rents remain nearly 6% higher than they were two years ago and over 12% higher than they were three years ago. While affordability has improved slightly in recent months, average rent growth over the past five years still outpaces wage growth, continuing to strain renters nationwide.

Rents Slip from Record Highs, But Seasonal Growth Returns

Despite the year-over-year decline, recent trends indicate that rents are expected to climb again through the spring. Over the last three months, national rents have increased by 2.0%, in line with typical seasonal patterns. Purpose-built rentals have shown the most stability, with a modest 2.0% drop year-over-year, compared to sharper declines for houses (-7.0%) and condos (-3.6%). Larger family-sized units continue to hold up better, especially in the purpose-built segment, where three-bedroom apartments rose 3.9% annually to an average of $2,743.

Provincial Differences Highlight Rent Divergence Across Canada

British Columbia and Ontario remained the country’s most expensive provinces for rentals in May, despite year-over-year decreases of 2.6% and 3.6%, respectively. Alberta and Quebec also saw rent declines, while Saskatchewan, Manitoba, and Nova Scotia all posted moderate annual increases. The largest rent increases for three-bedroom apartments occurred in Saskatchewan (+7.5%) and BC (+7.3%). In contrast, two-bedroom rents declined significantly in Ontario (-5.8%) and BC (-3.9%).

Big Six Cities See Continued Rent Pressure

Rents declined in four of Canada’s six largest cities: Calgary, Toronto, Vancouver, and Montreal. Calgary led with a 7.9% annual drop, followed by Toronto (-6.8%) and Vancouver (-5.9%). Montreal apartment rents also decreased by 3.3%. Ottawa and Edmonton were the only major cities to post annual gains, though increases were modest. Ottawa stood out for rent growth across all unit types, with two-bedroom rents up 2.2% to $2,572. By contrast, three-bedroom rents in Calgary saw the steepest annual decline at 10.1%.

Ontario Shows a Wide Spectrum of Rental Conditions

Ontario cities once again represented a mix of extremes. Fifteen of the 25 most expensive markets outside of the Big Six were in Ontario, led by Oakville, Richmond Hill, and Markham. At the same time, the province also accounted for many of the most affordable and steeply declining markets. Richmond Hill saw a 9.0% year-over-year drop, while Windsor remains among the least expensive urban rental markets at $1,705.

Shared Accommodation Rents Mixed Across Regions

Shared accommodation rents fell in all four tracked provinces, with the national average down 4.7% to $945. Quebec saw the largest drop (-5.7%), while Ottawa bucked the trend with a 10.0% increase, reaching $1,030. Vancouver and Montreal both experienced nearly double-digit declines in this segment, highlighting weaker demand or shifting supply conditions in the shared living market.

Rental Impact on Mortgage Rates and Monetary Policy

The slowdown in rent growth, especially in key urban centres, is easing inflationary pressure from the shelter component of the CPI. If this trend continues into summer, it could support the case for future Bank of Canada rate cuts, especially if wage growth remains modest. For homebuyers, this creates less urgency to rush into the housing market if rental costs remain steady. Renewers and refinancers may also benefit from improving housing affordability if this cooling trend persists, although much still depends on the direction of interest rates and broader economic conditions.

Canada Market Rents Summary

The average rent in Canada was $2,118 for the month of May 2025, which decreased by 2.3% on a year-over-year basis.

The average rent for a bachelor apartment in Canada was $1,614 for the month of May 2025, which decreased by 0.8% on a year-over-year basis.

The average rent for a 1-bedroom apartment in Canada was $1,902 for the month of May 2025, which decreased by 2.9% on a year-over-year basis.

The average rent for a 2-bedroom apartment in Canada was $2,299 for the month of May 2025, which decreased by 3.9% on a year-over-year basis.

The average rent for a 3-bedroom apartment in Canada was $1,902 for the month of May 2025, which decreased by 3.9% on a year-over-year basis.

How Does Renting Compare with Homeownership in Today’s Housing Market?

Each $100,000 in mortgage balance costs an average of $521.15 per month on nesto’s lowest fixed 5-year rate at and $530.60 per month on nesto’s lowest adjustable 5-year rate at . For each $100,000 in mortgage balance, a 0.25% change in Canada’s policy rate impacts the monthly payment by $13.74. Rates used for calculation are those offered on insured purchases with less than a 20% downpayment on a 25-year amortization. Canada’s policy rate is 2.75%, and nesto’s prime rate is 4.95%.

Rental Price Changes by City

Rental Price Changes by Province

Rental Price Growth by Housing Type

Frequently Asked Questions on Canadian Housing Market Outlook for 2025

---

Why Choose nesto

At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are non-commissioned, salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and advice quality. nesto aims to transform the mortgage industry by providing honest advice and competitive rates using a 100% fully digital, transparent, seamless process.

nesto is on a mission to offer a positive, empowering and transparent property financing experience – simplified from start to finish.

Contact our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.

---