While many parts of Canada sweltered under high temperatures this summer, the country’s housing market stayed chilly with homebuyers feeling spooked.
But experts say the summer of buyers getting cold feet might not be over just yet.
“It’s been anything but a traditional housing market,” said Penelope Graham, mortgage expert at Ratehub.ca.
The threat of tariffs imposed by U.S. President Donald Trump loomed large over Canadians.
“People were very anxious and nervous when these tariff threats were initially made,” Graham said.
Fears around a possible recession and widespread job loss “dissuaded a lot of people from making their home buying decision,” she added.
Before the tariff threats, it was expected that 2025 would see quite a hot housing market.
“In the latter months of 2024, it was anticipated that this would be quite a hot housing market. There was a lot of pent up demand. People had been waiting out very high interest rates and we were finally seeing those come down,” she said.
Around 467,100 old homes are expected to be resold in Canada this year, a drop of 3.5 per cent compared to last year, an RBC report said earlier this month.
The bulk of the pullback — a drop of 4.1 per cent — has already taken place in the first six months of the year, it added.
This year’s summer housing market was not just atypical for the economic anxiety Canadians were feeling, but also because buyers got more choice in the market.
“You’ve got a lot of product that’s on the marketplace right now,” said Royal LePage broker Shawn Zigelstein, adding that unsold houses have been staying on market a lot longer than normal.
While some buyers are spooked from entering the market, others have pulled out of the home-buying process midway through.
Some experts say this market has given buyers some breathing room from making big decisions quickly.
Get daily National news
Get the day’s top news, political, economic, and current affairs headlines, delivered to your inbox once a day.
“In a regular Toronto market, there’s no time for cold feet. You place offers unconditionally, get it accepted, and then you deal with repercussions later,” said Rishard Rameez, CEO of real estate brokerage Zown.
During the peak of the Canadian housing market in 2022, it was rare in some markets for buyers to be able to place any conditions whatsoever.
“This summer, buyers have been able to take a less intense route to buying a home. They’re able to put conditions in place before a transaction goes through,” he said.
“We’ve seen a lot of people back out of the home search process. A lot of people who started the process with us, got a mortgage pre-approval, got into the market, looked at a few properties, delayed their home buying plan until next year,” Rameez added.
The biggest reason for deals falling through and buyers getting cold feet is that would-be purchasers now have the time to put in place home inspection and financing conditions.
“We had a couple who placed an offer on a property. The property looked great, but then we did the inspection. The report said there was asbestos in the building. That poses a health risk and, potentially, insurance issues as well,” he said.
The 2025 summer market was not a “jump first” market, Zigelstein said.
“They’re (buyers) just being very strategic along the process of what they’re doing. It’s not a jump first market, which we’ve seen in the past,” he said.
The two sides tried to negotiate and bring down the price, but ultimately the deal fell through.
Financing conditions are another big reason why deals have fallen through this year, Rameez said.
A financing condition clause in a real estate deal essentially says a sale is contingent upon the buyer’s ability to secure a mortgage and the bank determining that the fair market value of the property is what the seller says it is.
“Even a few thousand dollars up and down could mean they might not get financing approved,” Rameez said.
The second half of the summer saw some recovery in the housing market.
“We’re really seeing some compelling signs that buyers are feeling a lot better about participating in today’s housing market,” Graham said, pointing to four consecutive months of housing sales going up in Canada according to the Canadian Real Estate Association (CREA).
“Some of that inventory that built up over those quiet months is now starting to be absorbed. It’s becoming a little bit more competitive to be a buyer,” she said.
Realtors are hoping for a hot fall housing market.
According to RBC economist Robert Hogue a “gradual recovery” of the housing market will continue into the second half of the year, “setting the stage for stronger demand in 2026.”
However, Graham said it is still a far cry from the peak of the housing market in February 2022.
“The national average home price is still over $143,000 lower. It’s still 17.6 per cent lower (compared to February 2022),” she said.
Canada is also still in a trade war.
“It’s difficult to make a long-term assessment because the headwinds in terms of tariffs and trade wars have not gone away. They’re still extremely unpredictable,” Graham said.
Experts say the gradual recovery has more to do with the cyclical nature of the housing market, with more people typically looking for a new home in the fall than in the summer.
“Typically, the fall market is always our second strongest market of the year after the spring market,” Zigelstein said.
Some of the summer chill could carry forward into the autumn, he added.
“Do we expect that fall market to increase substantially? I think it will increase over the summer market, but I don’t think we’re going to see typical fall numbers,” Zigelstein said.
