Is the US losing its largest group of international buyers? 

Interest in U.S. homes continues to wane among Canadians as concerns about tariffs and deteriorating U.S.-Canada relations impact the housing industry.

Canada-based Redfin.com searches for homes in the U.S. fell 26.4% in May compared to one year earlier, according to a July 4 Redfin report. Though the decline is smaller than the 34.2% year-over-year drop in April when President Donald Trump first announced steep tariffs, it far exceeds the 3.6% year-over-year decline in January and is well above the overall web traffic decline that has occurred amid the housing market slowdown, the report noted.

The shift is notable, as Canadians typically make up the largest share of foreign buyers who purchase homes in the U.S. According to the National Association of Realtors' 2024 report on international transactions, Canadian buyers accounted for 13% of all foreign buyers and purchased an estimated $5.9 billion in U.S. real estate between April 2023 and March 2024.

Sources of economic strain: Along with the souring mood toward the U.S. as a result of the tariffs and Trump's rhetoric about Canada becoming the "51st state," economic pressures appear to be factoring into the slowdown of Canada-based searches for U.S. homes. The Canadian dollar was relatively weak this spring, hovering around 70 cents compared to the U.S. dollar. That makes it more expensive for Canadians to buy U.S. products.

Canada is facing tariffs of up to 25% for products that don't comply with the U.S.-Mexico-Canada Agreement of 2020 with the exception of energy products, which are at 10%. Canada and the U.S. are currently in trade negotiations, with a bilateral agreement expected later this month.

Canada battling sluggish housing market: Much like the U.S., the Canadian housing market remains weak, a factor that impacts Canadians who might otherwise be interested in purchasing a second home in the U.S. 

Home prices in Canada are expected to fall a cumulative 8-10% by the end of the year as distressed homes hit the market and add to the housing supply, according to an Oxford Economics report detailed last week in the Financial Post.

The authors of the report cited poor affordability, weak confidence and job losses as top factors in Canada's housing market slowdown.

U.S. market impact is widespread: The downtick in Canada-based searches for U.S. homes is occurring across the country — not just in warmer metros where many people go to dodge the winter weather, Redfin's report noted. Houston had the biggest decline among large metro areas, falling 55.2% year-over-year in May. Philadelphia had the second-largest drop of 53% year-over-year, and Chicago followed (down 47%).

Snowbird destinations are also seeing significant declines in terms of overall numbers. In Florida, the share of Canadians looking for homes in Miami and Orlando dropped around 30% year-over-year. However, the report noted that interest in the Florida market has also cooled for Americans and other foreign buyers for a variety of reasons, including rising insurance costs.

Across the country, Canada-based searches dropped about 23% for homes in Phoenix and Palm Springs, California. Marsha McMahon-Jones, a Redfin Premier agent in Palm Springs, noted in the report that it has been "at least a year" since she last worked with a Canadian buyer.

"I'm in touch with a few potential buyers, but they're staying put in Canada for now with the idea of potentially making a move if and when Canada-U.S. relations improve," McMahon-Jones said. "I haven't heard of any Canadians who already live here part of the year listing their Palm Springs home, though."