Recovering and stabilizing. Gradually.

The Canadian used-car market has taken its punches, but inventory levels are improving and while affordability remains a concern, prices are normalizing. And the declines in used-car sales are slowing.

That’s according to Carfax Canada’s midyear Used Vehicle Market Insights report released last week.

There were 277,361 used-car transactions in June, up 1.3% from May and down 2.9% year-over-year. The decline suggests that “demand has stabilized but has yet to return to 2025 levels,” Carfax Canada said in the report, later noting that “the year-over-year decline is notably smaller than many of the declines observed earlier in the year.”

In the first half of the year, there were roughly 1.49 million used-car sales in Canada, off 4.2% from the year-ago period, Carfax Canada said. But they noted used-car sales are turning a corner after a sluggish start to 2026.

Also turning a corner, albeit slowly: affordability.

“Industry data suggests that easing prices and better inventory availability are helping support vehicle purchases, even as consumers remain cautious about larger financial commitments,” Carfax Canada said.

“This is reflected in June transaction activity, which increased month-over-month despite remaining below year ago levels,” analysts added. “Used-vehicle inventory has become more accessible, while pricing has avoided the volatility experienced during the supply-constrained period of 2021–2023.”

Used-car inventory came in at 221,446 units in June, up 15.5% from May and up 2.5% from June 2025 — giving car buyers more choices at the dealership, Carfax Canada said.

Meanwhile, average used-car listing prices were up a touch (0.2%) from May at $31,487, but down 4.7% year-over-year.

Again, the theme of normalization.

“Used-vehicle inventory ramped up over the last two months, giving consumers more options, while contributing to a more stable pricing landscape,” Carfax Canada said.

“National listing prices have largely stabilized throughout 2026 and remain below levels observed a year ago, but still higher than pre-pandemic levels,” the company said.

“Inventory levels continue to expand while pricing remains relatively stable, a sign that the market is gradually moving away from the supply-constrained conditions seen in recent years.”

More plentiful inventory is among three factors that Carfax Canada believes will have an impact in the second half of 2026. The company is also watching affordability pressures, driven by rising household costs and financing expenses, as well as uncertainty in Canadian-U.S. trade and CUSMA negotiations.

“While expanding inventory should help maintain price stability and improve consumer choice, broader affordability concerns and ongoing economic uncertainty may continue to moderate demand growth,” Carfax Canada said.

“June transaction activity improved month-over-month, but overall sales volumes remain below 2025 levels, suggesting a gradual rather than rapid recovery in demand.”