By Robb M. Stewart

OTTAWA--There was a jump in Canadian real-estate listings to start the year even as home resales faltered.

National sales of existing homes dropped 3.3% in January from the previous month, the Canadian Real Estate Association said Wednesday. The decline came mainly toward the end of the month as fears heightened over U.S. tariffs on imports from Canada.

Activity on a nonadjusted basis was about 2.9% above year-earlier levels.

At the same time, the number of newly listed homes in January increased 11% from that of the final month of 2024, representing the biggest increase in supply on record going back the late 1980s if the volatile pandemic period is excluded, the association said.

Shaun Cathcart, CREA's senior economist, said the fall in demand for existing homes showed up around the last week of January amid uncertainty around tariffs.

The country is suddenly in a softer pricing situation, particularly in British Columbia and Ontario, after markets had been tightening since last fall, Cathcart said.

There were close to 136,000 properties listed for sale on all Canadian multiple-listing-service systems at the end of January, up almost 13% from a year earlier but still below the long-term average for that time of year, which is around 160,000 listings.

With sales down amid a surge in new supply, the national sales-to-new-listings ratio fell to 49.3% compared with readings in the mid-to-high 50s in the fourth quarter of last year. Readings between 45% and 65% are generally consistent with balanced housing-market conditions.

"While we continue to anticipate a more active spring for the housing sector, the threat of a trade war with our largest trading partner is a major dark cloud on the horizon," James Mabey, chairman of CREA, said. "While uncertainty about the economy and jobs will no doubt keep some prospective buyers on the sidelines, a softer pricing environment alongside lower interest rates will be an opportunity for others."

The association's data indicated that benchmark house prices, calculated in a similar fashion to that of the S&P CoreLogic Case-Shiller National Home Price Index, were little changed last month, edging down by less than 0.1% from December. The association's composite home-price index has been largely steady in the last year, with ongoing softness in B.C. and Ontario offsetting rising prices in Canada's prairies provinces, Quebec, and across the East Coast.

The Bank of Canada late last month cut its policy interest rate for a sixth time since June, making it the most aggressive among Group of Seven central banks in reversing some of the rate increases imposed to tame inflation. However, with its latest rate decision the central bank removed any guidance on the future direction of rates amid uncertainty over President Trump's threatened tariffs on exports from Canada, Mexico and other countries.

Five successive interest-rate cuts by the Bank of Canada since June, which have lowered the central bank's policy rate 1.75 percentage points in all, have started to breathe life back into Canada's sluggish housing market. Economists widely expect further rate cuts this year in an effort to prevent inflation from dropping too sharply and amid political and trade uncertainty in North America, though Bank of Canada policymakers have signaled a pivot to a more gradual approach to monetary policy after a second outsize cut in December.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

February 18, 2025 10:38 ET (15:38 GMT)

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