By Robb M. Stewart

OTTAWA--Home resales in Canada rose in May for the first time in half a year, a possible sign of returning confidence among homebuyers who have been hesitant to commit amid the uncertainty caused by the Trump administration's levying of import tariffs.

National sales of existing homes rose 3.6% from the previous month, the Canadian Real Estate Association said Monday. Still, activity on a nonadjusted basis was about 4.3% below year-earlier levels.

"It's only one month of data, and one car doesn't make a parade, but there is a sense that maybe the expected turnaround in housing activity this year was just delayed for a few months by the initial tariff chaos and uncertainty," Shaun Cathcart, CREA's senior economist, said.

The real estate association said the number of newly listed properties increased 3.1% between April and May. Given a similar increase in sales activity, the national sales-to-new listings ratio was 47%, almost unchanged from 46.8% in April, consistent with balanced housing market conditions but still below the long-term average ratio of 54.9%.

Overall, there were 201,880 properties listed for sale at the end of May 2025, up 13.2% from a year earlier but remaining roughly 5% below the long-term average of around 211,500 listings for the month.

The association's data indicated that benchmark house prices, calculated in a similar fashion to the S&P CoreLogic Case-Shiller National Home Price Index, were little changed with a dip of 0.2% from the prior month. The relative pause follows three straight month-over-month declines of closer to 1%.

So far this year, Canada's economy has softened as households and businesses have scaled back spending plans and the labor market has steadily weakened.

Following seven successive interest rate cuts by the Bank of Canada through March, the central bank held fire at its last two policy meetings as uncertainty has built over the fallout on demand from the trade war with the U.S. and over just how much higher tariffs will feed into consumer inflation. Tensions with the U.S. have eased in recent weeks as the two countries look to negotiate a deal on trade, and Prime Minister Mark Carney was slated to meet with President Trump on the sidelines of the Group of Seven leaders' meeting in Alberta on Monday.

"May saw an increased number of new listings hitting the market early in the month, followed by a higher number of transactions in the second half of the month, so overall more sellers and buyers compared to April," said Valerie Paquin, chair of CREA. "It seems like this may carry over into June as well."

The rise in May home resales comes after little change the month before, when activity eased 0.1% month-over-month. With sales still 15.5% below the level in November last year, that has reversed last year's rebound following the central bank's interest rate cuts and leaves activity only slightly above the depreciated level of sales observed in 2022, National Bank of Canada economist Daren King said.

Economists note consumer confidence appears to have come off the lows of recent months but there remains caution on the outlook for the economy and over job security.

Canada's housing market remains subdued, though resale conditions in general aren't worsening and construction activity continues to push ahead, said Bank of Montreal senior economist Robert Kavcic.

"At a high level, it appears that a less-aggressive tone on the trade front and some political clarity in Canada have eased the stress on buyer confidence, but mortgage rates are still not low enough to improve affordability and/or rekindle investor demand," said Kavcic, who continues to anticipate subdued sales and listless prices at the national level.

The Toronto Regional Real Estate Board earlier in the month said residential sales were down 13.3% in May compared with a year earlier while new listings climbed 14%. Still, on a seasonally-adjusted basis, transactions increased by 8.4%.

"The issue is a lack of economic confidence. Once households are convinced that trade stability with the United States will be established and/or real options to mitigate our reliance on the United States exist, home sales will pick up," said Jason Mercer, the Toronto board's chief information officer.

Still, the Quebec real estate market remains resilient. Total sales across the province were up 10% in May on last year and have risen 12% year-to-date, while new listings were up 10% for the month, according to data compiled by the Quebec Professional Association of Real Estate Brokers.

Housing starts across Canada came in at a seasonally-adjusted annualized rate of 279,510 units, a modest 0.2% decline from the month before, Canada Mortgage and Housing Corp. said Monday. That was stronger than the 255,000 residential housing projects the market was expecting to have started for the month, according to economists at TD Securities.

The trend measure--a six-month moving average of the monthly seasonally adjusted annual rate of housing starts--advanced a modest 0.8% to 243,407 units last month, Canada's national housing agency said.

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

(END) Dow Jones Newswires

June 16, 2025 11:30 ET (15:30 GMT)

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