The Canadian Real Estate Association (CREA) reported that sales of existing homes dropped in February. CREA cited falling consumer confidence amid the introduction of new tariffs, which has weighed on purchasing decisions. Tariffs are expected to weaken economic activity in Canada, which could negatively impact household spending and investment decisions. Retail sales data from the US yesterday also showed that household strength might be waning, with tariffs expected to raise prices and hurt consumer activity in the country.

• Sales of existing homes in Canada declined by 9.8% in February over the previous month. This marked the largest monthly decline since May 2022. Compared to the same month last year, home sales were down 10.4%.
• CREA was hoping for stronger sales activity in 2025 amid lower interest rates and relatively lower prices. However, trade tensions between Canada and the US have shattered consumer confidence, leaving many on the sidelines. CREA noted that it’s an opportune time to get into the market, with lower mortgage rates and some relief on home prices.
• New listings dropped by 12.7% in February but were up by 13.1% year-over-year. The average price of a home declined by 4.6% in February over January.
• Retail sales in the US rose by 0.2% in February. Despite reversing from the 1.2% decline in January, February’s increase didn’t meet economists’ expectations, based on a Bloomberg survey.

Trade tensions are impacting trade activity between Canada, the US, and other economies around the world. They’re also weighing on consumer optimism, with households uncertain about the outlook for their respective economies. This is reducing activity in Canada’s real estate market. Trade disruptions tend to have far-reaching impacts. Despite periods of uncertainty, Canada’s economy has always shown its relative resiliency.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.