A Quiet Finish to a High-Inventory Year
Big Picture
December 2025 closed the year the way many of us expected: slower, softer, and more selective. This wasn’t a sudden shift—it was the natural compression of a market that spent most of the year carrying elevated inventory and cautious buyer psychology. Sales pulled back sharply from the fall, new listings tapered off as sellers stepped aside for the holidays, and prices softened further on both a month-over-month and year-over-year basis.
What matters most here is context. December didn’t change the market’s direction—it confirmed it. Buyers continued to hold leverage thanks to choice and patience, while sellers who remained active were increasingly motivated by timing, finances, or life changes rather than optimism. In other words, the market didn’t freeze—it clarified.
Sales & Demand: Seasonally Quiet, Selectively Active
Sales in December declined to 3,697 transactions, down 26% from November, which is entirely consistent with year-end seasonality. More telling, however, is that sales were up just over 10% year-over-year, suggesting buyers didn’t disappear—they simply became more deliberate.
Detached, semi-detached, and townhouse segments all experienced sharp month-over-month slowdowns, while condo sales also pulled back after a relatively active fall. This reinforced a theme that played out throughout 2025: buyers will move forward when pricing aligns with perceived value, but they’re unwilling to chase—or compromise, especially in the slow months of the year.
Inventory & Supply: Relief, Not Resolution
Active listings fell to 17,005, down more than 30% from November, largely because new listings collapsed to just 5,299—a normal December retreat. That said, inventory levels remained over 10% higher than December 2024, underscoring that the market is still structurally well supplied despite the seasonal pause.
This distinction matters. Negotiating pressure didn’t reset—it simply went dormant. Buyers heading into early 2026 will still be comparing options, price reductions, and listing histories from late 2025. Sellers hoping for a clean slate in January may find that buyers remember December listings very clearly.
Pricing & Value: A Soft Landing, Continued Sensitivity
The average Toronto home price slipped to $1,006,735, down 3.1% month-over-month and 5.7% year-over-year. Every major property type felt pressure, with detached and semi-detached homes posting notable annual declines, and condos continuing to wrestle with affordability ceilings and investor hesitation.
A key divergence worth noting: detached homes continued to see price sensitivity tied to affordability and carrying costs, while condos faced a different challenge—buyer hesitation driven by fees, investor pullback, and an abundance of comparable options. In short, detached pricing softened due to demand constraints, while condo pricing remained capped by supply and sentiment.
Equally telling: average days on market climbed to 65, the highest level of the year. Buyers weren’t rushing—and sellers were often forced to adjust expectations mid-listing. Gaps between initial list prices and achieved sales remained wide, particularly where sellers anchored to early-2022 or early-2023 benchmarks.
Housing Segment Performance: What the Numbers Showed in December 2025
Detached Homes
Detached home sales pulled back sharply in December, consistent with seasonal norms, but the more important trend was pricing behaviour. Detached prices continued to trend lower on a year-over-year basis, reinforcing that affordability—not demand—is the limiting factor. Buyers remained active, but only at price points that reflected today’s borrowing costs, not past peaks.
The rise in days on market was especially noticeable in this segment, signalling that detached sellers faced the greatest gap between expectations and buyer willingness. Homes that corrected early still sold; those that didn’t often linger. The year-end data suggests detached pricing remains sensitive heading into early 2026 unless rates or sentiment shift meaningfully.
Semi-Detached Homes
Semi-detached homes followed the same directional trend as detached properties, though with slightly better liquidity. Sales slowed month-over-month in December, but not disproportionately, reflecting steady underlying demand for this middle-ground housing type. Year-over-year performance was more stable than detached, reinforcing that buyers still see semis as a relative value play.
Pricing softened modestly rather than sharply. December showed that buyers had very little tolerance for even slight overpricing—homes that launched realistically moved, while those that didn’t quickly blended into available inventory.
Townhouses
Townhouse sales cooled alongside the broader market, but this segment continued to benefit from functional end-user demand. Price movement was relatively flat compared to detached homes, though performance varied significantly by product type. Freehold townhomes held value better, while stacked and condo townhomes behaved much more like the condo segment.
Days on market increased slightly, but not alarmingly. The key trend here is separation rather than decline: townhouses with clear value propositions remained competitive, while those caught between pricing tiers faced longer exposure and heavier negotiation.
Condos
Condos remained the most challenged segment heading into year-end. Sales slowed in December, and elevated inventory continued to weigh on pricing momentum. Year-over-year price softness persisted, reflecting investor pullback and increased competition among listings.
While entry-level and end-user-friendly units still attracted interest, buyers showed little urgency. Rising days on market and frequent price adjustments confirmed that leverage firmly rests with buyers. December reinforced that condos are likely the last segment to see pricing stabilization unless supply meaningfully contracts.
What This Means for Buyers
December reinforced that patience remains a valid strategy. While selection may thin temporarily, motivated sellers still exist—and many are willing to negotiate meaningfully on price, terms, or closing flexibility. Buyers who understand value, rather than simply chasing discounts, are best positioned as we move into early 2026.
For buyers looking to understand neighbourhood-level pricing and opportunity, exploring recent Toronto market breakdowns can help frame where value is emerging.
What This Means for Sellers
If you sold in December, you likely did so because you priced with intent. If you didn’t, the message is clear: 2026 will continue to reward preparation, pricing discipline, and strategic timing. Waiting only makes sense if expectations are flexible—and your timing truly allows it.
Sellers considering an early-2026 launch should pay close attention to how inventory rebuilt throughout 2025, as those patterns are likely to repeat.
Short-Term Outlook
As we head into the first quarter of 2026, expect inventory to rebuild quickly, buyer engagement to return cautiously, and pricing conversations to remain grounded. Interest-rate sentiment may improve marginally, but psychology—not policy—will continue to shape negotiations.
Thinking About Selling in 2026?
If a move is on your horizon this year, the groundwork matters more than ever. Pricing strategy, timing, and presentation—not hope—are what separate homes that sell cleanly from those that linger. If you’d like to talk through how this market impacts your buying or selling plans, send us a message below!
