TD now sees 2026 home sales down 1.8% and prices slipping, after scrapping its bullish call
TD Economics no longer expects any growth in Canadian home sales or prices this year – it now sees both slipping, after a weak start that forced a “steep downgrade” to its 2026 outlook.
According to CTV News, TD Economics now forecasts a 1.8 percent year-over-year decline in national home sales in 2026 and a 0.3 percent drop in average prices, instead of the 9.3 percent sales gain and 4.1 percent price increase it projected in December.
Economist Rishi Sondhi said housing activity will likely spend most of the year recovering first-quarter losses, as a subdued economy, heightened uncertainty and ongoing cost-of-living pressures continue to restrain demand.
TD’s latest provincial housing market outlook attributes the downgrade to weaker-than-expected performances in late 2025 and especially the first quarter of 2026.
The report says severe weather weighed on activity in Central and Atlantic Canada early in the year, while British Columbia also showed weakness despite more temperate conditions.
Interest rates play a limited role in the revised call.
TD Economics says it expects the Bank of Canada to remain on hold in 2026, with no major moves in bond yields that help set fixed mortgage rates, so it views interest rates as a “largely neutral” factor for the housing outlook.
The downgrade lands hardest on Ontario and BC.
According to CTV News, TD previously expected home sales to rise 13 percent in Ontario and 15.1 percent in BC In its new forecast, Ontario sales are set to fall 3.2 percent, while BC activity is expected to edge 0.2 percent lower.
Prices are now projected to drop 4 percent in Ontario, instead of the 0.6 percent gain forecast in December, and decline 1.2 percent in BC, versus a previously expected 3.6 percent increase.
TD’s report says Ontario and BC saw the sharpest downgrades to sales and price growth after “significant” first-quarter declines, with affordability pressures and expectations of further price declines keeping buyers on the sidelines.
According to TD Economics, pent-up demand in those provinces “has yet to re-emerge as quickly as previously expected,” which suggests further price declines may be needed to unlock activity.
The report also says strained affordability continues to weigh on demand and that falling prices are likely keeping potential buyers waiting for a clearer bottom.
Within Ontario, TD Economics describes the Greater Toronto Area condo segment as “the weakest in the country,” with elevated supply that must be absorbed before prices stabilize.
Demographic shifts also frame the outlook.
TD Economics reports that Canada’s population declined last year for the first time since Confederation, driven by losses in Ontario and BC, which contributed to softer rental demand and falling rents that are discouraging investor activity there.
By contrast, TD says Alberta stands out with the strongest population growth nationally, supported by immigration and continued interprovincial inflows that bolster ownership demand.
On the risk side, Sondhi warns that a broader or more prolonged escalation of Middle East tensions could bolster housing in oil‑producing regions, weigh more heavily on oil importers and unleash pent‑up demand in Ontario and BC “faster or more forcefully than expected.”
He adds that upcoming CUSMA negotiations “loom large” for the broader economy and, by extension, the housing market.
TD Economics still sees a medium-term recovery.
The report says improved economic and labour market conditions in 2027, plus lower uncertainty and better affordability after price declines in Ontario and BC, should lift Canadian home sales off their 2026 lows and restore modest gains in the national average price.
According to CTV News, TD now expects home sales to rise 9.6 percent year-over-year in 2027, with average prices up 2.7 percent.
