Canadian housing markets are often judged by a small set of familiar indicators. Months of inventory. Sales-to-new listings ratio. Year-over-year price changes. When these measures sit near long-term averages, the conclusion tends to follow quickly. The market is balanced. Conditions are stable. Risks are contained. That conclusion deserves closer scrutiny.

Late in a housing cycle, stability on the surface can coexist with growing instability underneath. Balanced conditions can persist not because the system is healthy, but because opposing pressures are temporarily cancelling each other out. When that happens, small shifts can have outsized effects.

The November 2025 national housing data by the Canadian Real Estate Association (CREA) fits squarely into this pattern.

What November Data Shows?

Home sales edged down 0.6% from October. New listings fell by a slightly larger 1.6%. The sales-to-new listings ratio tightened marginally to 52.7%, just below the long-term average of 54.9% and well within the range historically associated with balanced markets. Months of inventory held steady at 4.4, unchanged since the summer and close to the five-month long-term norm.

Taken at face value, these figures suggest equilibrium. Demand is neither climbing nor collapsing. Supply is neither flooding nor vanishing. Price declines are modest. The MLS Home Price Index slipped 0.4% month over month and sat 3.7% below last year. The average home price fell 2% year-over-year to roughly $682,000.

It would be easy to read these trends as confirmation that the market has found its footing. That would be nothing more than a mistake.

Why Late-Cycle Stability is Inherently Fragile?

Balanced conditions are often treated as a sign of resilience. In early or mid-cycle markets, that assumption can hold. In late-cycle environments, it frequently does not. Stability at this stage is more likely to reflect hesitation than confidence, and delay rather than resolution. The defining feature of today’s market is widespread caution.

Buyers are present, but selective. Sellers are active, but flexible. Transactions are occurring, but only where expectations converge. Activity has not collapsed, yet it has stopped accelerating. Sales have moved sideways since July despite lower interest rates and improving rate certainty. This is the behaviour of a market waiting. When both sides wait, headline balance metrics can remain deceptively calm.

What makes this phase fragile is thin liquidity. Fewer marginal participants are willing or able to transact. Decisions that might have been pulled forward in other cycles are being deferred. That leaves price discovery to a narrower set of buyers and sellers. In such conditions, stability becomes conditional.

Why Small Shocks Matter More Now?

Small changes in the environment matter more. A shift in rate expectations. A labour market wobble. A policy adjustment. Any one of these can move outcomes disproportionately because there is little buffer underneath the surface.

The November data already hints at this dynamic. Price concessions appeared without an uptick in listings. Sellers adjusted expectations not because inventory exploded, but because year-end deadlines and carrying costs forced realism. The decline in the price index reflects execution pressure, not panic. This distinction matters.

In healthy markets, prices move because demand overwhelms supply or vice versa. In late-cycle balanced markets, prices move because certain participants cannot wait. Mortgage renewals reset payments higher. Developers manage balance sheets. Investors reassess returns under sustained financing costs. Households respond to life events that do not respect market timing. These forced transactions set the marginal price.

When liquidity is thin, they do not need to be numerous to matter.

Why “Balanced” Doesn’t Mean Safe?

This is why balanced conditions late in a cycle should not be mistaken for safety. They often mark a period when the market is most sensitive to shocks, precisely because headline indicators appear benign. Stability can persist right up until it breaks.

The broader context reinforces this reading. As alluded to in the CREA commentary, 2025 was widely expected to be the year housing markets emerged from their interest rate-induced hibernation. That recovery never fully materialized. Rate relief arrived, but confidence did not follow at the same pace. External economic disruptions, including the impact of U.S. trade actions, softened growth and altered expectations. Lower rates reflected weaker conditions as much as policy progress.

As a result, the market did not reset through volume. It adjusted through restraint. That adjustment is still underway. Months of inventory remain below buyer’s market territory. Listings sit modestly below historical norms for this time of year. There is no evidence of capitulation. At the same time, there is little evidence of renewed urgency.

This is the tension that defines late-cycle balance. The system is neither overheating nor healing.

What This Means Going Forward?

For policymakers, investors, and market participants, the implication is straightforward but often overlooked. Do not confuse calm data with durable stability. In environments shaped by delayed decisions and constrained liquidity, balance is fragile by definition.

The coming year will test this reality. If conditions improve meaningfully, activity should follow. If uncertainty persists, stability will remain dependent on restraint. In either case, the risk is not found in headline ratios, but in how quickly they can change once waiting turns into necessity.

Balanced markets are not always safe markets. Late in a cycle, they are often the most revealing.

Foch : When A “Balanced” Housing Market Doesn’t Mean Stability by Daniel Foch | REM Real Estate Magazine