Updated forecast signals slower sales growth and muted price gains through 2027
The Canadian housing market is expected to moderate over the next two years due to the shifting economic landscape, according to a new outlook.
The Canadian Real Estate Association has lowered its expectations for home sales and price growth through 2026 and 2027, citing renewed uncertainty around interest rates and a weaker-than-anticipated start to the year.
CREA’s updated projections still hinge on the release of pent-up demand, especially from first-time buyers who have largely been locked out of the market over the past four years. The association noted that a key condition for that demand to return has been greater stability in borrowing costs and home prices, with rate cuts no longer expected and price declines easing in some regions.
However, that outlook shifted in mid-March.
A surge in oil prices pushed inflation higher, increasing the likelihood of a potential rate hike from the Bank of Canada later this year.
That in turn lifted bond yields and triggered a rise in fixed mortgage rates. CREA said the impact of higher borrowing costs could directly suppress housing activity, while also prompting buyers to delay purchases in anticipation that rates may fall again if the oil shock proves temporary.
Combined with a sluggish economic backdrop and softer housing data in the first quarter, those factors led CREA to revise its forecast downward.
The association now expects 474,972 homes to change hands through Canadian MLS® Systems in 2026, marking a modest 1% increase from 2025 levels.
As previously anticipated, most of that growth is expected to come from Ontario and British Columbia, where sales have more room to rebound. In contrast, other regions may see only limited gains—or even declines—after earlier strength driven in part by population growth that has since eased.
On the pricing side, the national average home price is projected to rise 1.5% this year to $688,955. Gains are expected to be minimal in B.C., Alberta, and Ontario, while other provinces could see increases in the 2% to 5% range.
Looking ahead to 2027, CREA forecasts a further 2.1% increase in home sales to 485,071 units. However, the association indicated that figure could surpass 500,000 if higher interest rates ultimately prove unnecessary to curb inflation.
Price growth is expected to remain subdued, with the national average edging up 0.9% to $695,094—keeping increases below the pace of inflation. CREA noted that both sales and price projections could be revised higher if current inflation pressures tied to oil prices ease more quickly than expected.
If realized, the outlook would mark a prolonged period of stability for home values, with the national average price hovering near the $700,000 level for a seventh consecutive year.
Meanwhile, New data from Royal LePage indicates that the aggregate price of a home in Canada fell 2.0% year over year to $812,900 in the first quarter of 2026. On a quarterly basis, however, prices were largely stable, edging up 0.7%.
“In a typical spring, Canada's housing market would already be gaining momentum, but persistently low consumer confidence remains a drag on activity – especially in our most expensive markets,” said Phil Soper, president and CEO of Royal LePage. “That hesitation is being driven by uncertainty beyond our borders. The inflationary impact of America's war with Iran is pushing energy prices higher, with ripple effects across the broader economy, while ongoing trade negotiations ahead of the CUSMA review are adding to concerns about economic stability and job security. For many Canadians, the headlines are hard to ignore.”
