February provided valuable insights into the trajectory of Canada's housing market. The optimism among buyers and sellers, fueled by expectations of an impending rate cut by the Bank of Canada, temporarily halted the downward trend in prices that persisted since last summer. However, this positive outlook has yet to translate into a consistent rebound in activity, as the pandemic-induced affordability crisis continues to constrain buyers.

We anticipate a turbulent path ahead for the housing market based on February's developments. Despite a slight improvement in demand-supply dynamics leading to modest price increases, fluctuations in resales are expected amidst a standoff between buyers and sellers.

Home resales across Canada declined by 3.1% between January and February, partially reversing the gains from the previous months. The overall market sentiment remains subdued, with February's sales volume standing 11% below the 10-year average.

A consecutive increase in new listings suggests growing seller confidence in sales prospects, potentially spurred by an early start to the spring market. While this led to increased transactions in Montreal and Quebec City, activity in other parts of Canada remained sluggish.

The national composite MLS Home Price Index remained unchanged from January, signaling a potential end to the correction phase. However, regional variations persist, with some markets experiencing declining trends while others show signs of stabilization.

As we enter the spring season, sellers and buyers are expected to approach negotiations from contrasting perspectives. Sellers may maintain firm price expectations due to tighter demand-supply conditions, while budget constraints will limit buyers' ability to increase bids. This standoff could keep deal-making subdued until anticipated interest rate cuts bolster buyers' purchasing power later this year.