CANADA HOUSING MARKET: MARKET CONDITIONS EASED IN SEPTEMBER, ALONG WITH THE MLS HOUSE PRICE INDEX
SUMMARY
National housing sales declined from August to September following five consecutive monthly increases. New listings also declined over this period but at a lesser pace, thereby resulting in a mild decline in the sales-to-new listings ratio. The national MLS House Price Index continued to edge down in September, pursuing its downward trend since summer of 2023.
National housing resales (in units) declined -1.7% (sa) from August to September. This is the first monthly decline since March of this year as unit sales posted an increase in each of the subsequent months to August. Despite this decline in September, national sales were still higher than their March level by 10.3% (from sa figures). And from the same month in 2024, sales increased by 5.2% in September (nsa).
New listings declined nationally by -0.8% (sa) from August to September but rose 8% (nsa) since September of 2024. Despite this decline in September, national new listings are still on an upward trend since their recent through in March 2023. This, combined with the trend in sales that has been essentially flat, pushed and kept the national sales-to new listings ratio in the lower half of the balanced conditions range for this indicator for most of the period since mid-2023. In September 2025, this indicator was at 50.7% (sa), 0.5 percentage point below its August level.
Months of inventory—another indicator to measure tightness in the resale market—were at 4.4 nationally in September (sa figures), unchanged from the previous month and still below its pre-pandemic long-term average of 5.2. This indicator of national market conditions has eased since its most recent trough in November 2024 when it was at 3.7, and more generally since early 2022. Like previous months, this indicator was below its long-term average in all provinces except in British Columbia and Ontario where they exceeded it by 1.1 and 0.9 month respectively. And Quebec and Atlantic provinces were still showing the largest negative deviations from their long-term average in September.
The national MLS House Price Index (HPI) continued to edge down from August to September (-0.1% sa) with all unit types contributing to this decline—except for townhouses (+0.3%)—with the largest monthly decline observed for apartment units at -0.3%. The MLS HPI declined -3.4% (nsa) since September 2024 with all unit types contributing to this annual decline, and the largest observed for apartment units at -5.4%.
Therefore, the MLS HPI continued in September its downward trend that started in March 2022—with the beginning of the tightening cycle for monetary policy in Canada, the U.S. and other economies—consistent with the broad trend easing in national market conditions since then. Nevertheless, despite this sustained trend decline over this period, the national MLS HPI was in September still 26.4% (from sa figures) above its pre-pandemic level (December 2019), implying an average annual pace of growth of about 4.2% for this period.
From August to September, sales declined in 18 of the 31 local markets we track while market conditions—as measured by the sales-to-new listings ratio—eased in nearly 55% of them. From the same month in 2024, the sales-to-new listings ratio declined in close to 2/3 of the markets we track.
Based on the sales-to-new listings ratio, 18 of the 31 local markets we track were balanced in September while 9 of them— as in August all in B.C. and Ontario—were deemed favourable to buyers. Market conditions were deemed favourable to sellers in only 4 centres, being Lethbridge, Regina, Saskatoon and Quebec City.
The sharpest declines in unit sales from August to September were observed in Peterborough (-29.3%; sa), Saint John (-19.8%), Lethbridge (-15.8%). Despite the sharp monthly decline in sales, the sales-to-new listings ratio for Peterborough increased by more than 9 percentage points in September due to the much larger decline in new listings during this period (-41.5%). New listings also fell at a faster pace than sales in Lethbridge during this period, but the difference was small such that the monthly rise in its sales-to-new listings ratio was modest (+0.8 p.p.). Over this period, strongest monthly rises in sales in September were observed in Brantford (11.8%), Regina (6.6%) and Winnipeg (5.6%).
IMPLICATIONS
National housing market conditions are still relatively soft despite the trend rise in sales from their recent trough last March. National sales declined in September, but such reversals are not surprising given the volatile nature of monthly information, and even more so now due to the ongoing elevated uncertainty from the significant rise in global trade tensions in recent months.
Key for the dynamics of the national housing price is the profile for market conditions. The continuation last month of the sustained downward trend in the national MLS HPI since March 2022 suggests underlying market conditions are weaker than suggested by the sales-to-new listings ratio and the months of inventory, as they both suggest national conditions are relatively balanced, or mildly tight in the case of the latter since below its long-term average.
But these indicators of market conditions do not fully capture the complete demand-supply balance for the housing markets, hence likely not absorbing all pressures on house prices. Indeed, additional downward pressures on prices are likely generated from the sustained rise in completed and unabsorbed units in Census Metropolitan Areas. Chart 1 shows the ratio of the number of these units to Canada’s population, which has more than doubled since its 25-year low in mid-2022. This rise in available new units is widening the pool of options for potential buyers. And with the decline in population growth since about mid-2024 and recent historical highs for housing starts, it could take time before this ratio declines meaningfully enough to reduce downward pressures on the MLS HPI.
DISCLAIMER
This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.
Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.
Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.
This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.
™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.
Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.
Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.