Housing data released in Canada and the US this week painted a mixed picture of residential real estate. In Canada, home sales gained momentum in May after a sluggish start to the year, while construction activity softened. South of the border, US housing starts dropped sharply in May, missing expectations by a wide margin. Taken together, the data suggest that demand for housing is building, but supply faces growing headwinds.

• Canadian home sales climbed 5.5% month over month in May, according to the Canadian Real Estate Association, marking the first meaningful rise in national demand in 2026. The national average sale price hit $680,892, a 1.5% increase from May 2025 and the highest monthly reading in two years.
• Despite the monthly improvement, sales were still 5.1% lower than May 2025 on a non-seasonally adjusted basis. Canada’s benchmark home price slipped 0.1% month over month and was 3.9% below year-ago levels.
• Housing starts in Canada retreated 6% in May to a seasonally adjusted annual rate of 261,377 units, according to the Canada Mortgage and Housing Corporation, though results were above expectations.
• In the US, housing starts dropped 15.4% in May to a seasonally adjusted annual rate of 1.177 million units, the weakest reading since May 2020 and well below the 1.430 million estimate. The decline was driven by a steep pullback in multi-family construction.
• US building permits were down 0.7% in May to 1.413 million units, roughly in line with expectations, and down slightly from a year ago. Single-family permits edged higher, suggesting builders are not abandoning new projects despite ongoing affordability pressures.

The improvement in Canadian home sales signals that buyers who were sitting on the sidelines earlier this year may finally be stepping back into the market. Still, the construction data on both sides of the border suggest the supply of new homes could remain tight heading into the second half of 2026.

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