National housing sales posted a 9.8% decline from January to February seasonally adjusted (SA), falling to their lowest level since November 2023, noted Scotiabank.

Compared with the same month in the previous year, national sales were 10.4% lower non-seasonally adjusted (NSA) in February 2025. The weak sales performance over the period December 2024 to February 2025 has more than offset the trend recovery witnessed since about the spring of 2023 to November 2024.

Despite the sharp monthly decline in sales from January to February, the national sales-to-new listings ratio edged up from 48.3 to 49.9% (SA) over this period as new listings declined 12.7% (SA), almost entirely offsetting the strong 14.8% increase in this indicator from December 2024 to January 2025. From the same month in 2024, new listings were almost unchanged, showing a modest 0.2% (NSA) decline in February.

One shouldn't conclude that market conditions tightened from January to February from the modest increase in the sales-to-new listings ratio as this indicator is volatile, stated the bank. Indeed, another indicator of market conditions -- months of inventory -- suggests a cooling in the national housing market as it rose from 4.1 months in January to 4.7 months in February (SA).

From this indicator, market conditions evolved differently across provinces over this period, easing in British Columbia, Alberta, Ontario and Quebec, unchanged in Nova Scotia and tightening for remaining provinces. In February, months of inventory were still below than their long-term pre-pandemic average nationally and for all provinces except for British Columbia and Ontario, pointed out Scotiabank.

The MLS House Price Index (HPI) declined 0.8% (SA) from January to February, following a 0.2% slip from December to January. This house price index declined 1% (NSA) from February 2024 to February 2025 with most unit-types contributing to this 12-month decline, except for one-storey single-family units for which the MLS HPI increased 0.8%.

From this price indicator, 12-month price declines for two-story, townhouse/row and apartment units were respectively 0.5%, 1.6% and 2.6% (NSA). However, all these indicators are still higher than their pre-pandemic level -- by between 21% and 40%.

The gains from the recovery path for national housing sales that occurred from about spring 2024 to November 2024 have been fully offset by the monthly declines observed since December, added Scotiabank. This period coincides with the initial announcement at the end of last November by the United States on its intention to impose steep tariffs on imports from Canada, Mexico and China, which has surely clouded the economic and income outlook for potential buyers.

These clouds darkened in recent weeks with actual implementation and rapidly changing decisions about timing and exemptions, as well as retaliatory measures by U.S. trading partners, including Canada.

Not surprisingly, potential buyers are nervous about purchasing a property given this high level of uncertainty about their future employment and income conditions, according to the bank. This trade war background was clearly at play in housing market activity in recent months given hard data alone would support stronger sales and tighter conditions than what was observed in the last three months.

As long as this uncertainty persists, Scotiabank doesn't expect a significant recovery in housing resale activity. If implemented and U.S. tariffs turn out to be steeper than what the bank expects, then housing markets and prices will likely exhibit additional weakness in the coming months.