Canada's housing market spent the first half of 2026 waiting for a recovery that kept getting pushed back. Now, with three of the country's most-watched forecasters — CMHC, CREA, and TD Economics — all having revised their outlooks within the same three-week window in July, a clearer, if more cautious, picture has emerged: 2026 is a soft year nationally, with a "slow grind" toward recovery beginning in 2027 and firming further in 2028. But that national story hides sharp regional splits, with the Prairies and parts of Quebec holding up far better than Ontario and British Columbia. Here's what the data actually shows, market by market, and what it means if you're buying, selling, building, or investing.
Key Takeaways
- CMHC's July 22, 2026 update revised its own February forecast downward, now expecting 457,200 home sales and a national average price of $675,200 in 2026 — both declines from 2025.
- CREA is comparatively more upbeat, forecasting 463,336 sales and a $686,710 average price for 2026 — a slight price increase rather than a decline.
- Housing starts are the clearest downside story: CMHC projects a decline to 241,400 units in 2026, then further drops to 223,400 (2027) and 211,900 (2028).
- Regional divergence is stark — the Prairies and Quebec show relative resilience, while Ontario and British Columbia face the weakest conditions, with Toronto's average price forecast to fall to around $1,020,000 in 2026.
- Every major forecaster describes the path forward as a "slow grind," not a sharp rebound, with meaningful improvement not expected until 2027–2028.
1. 2026 National Forecast at a Glance
Here's how Canada's three most-cited housing forecasters compare for 2026, based on their most recent published updates:
According to CMHC Deputy Chief Economist Kevin Hughes, the agency's mid-year update reflects a housing market still working through slower population growth, elevated borrowing costs, and modest income gains — a materially more cautious read than CMHC's own outlook from just five months earlier. CREA's July 15 revision, by contrast, points to a national average price that actually edges higher in 2026, illustrating how much forecasts can diverge even when working from similar underlying data.
2. Home Sales Forecast: CMHC vs. CREA vs. RBC
RBC Economics, in its own July monthly update, describes the market as having taken only "small steps" toward recovery — June resales rose just 0.5% month-over-month, and RBC Assistant Chief Economist Robert Hogue notes that sales remain roughly 12% below the 10-year seasonally adjusted average. TD Economics strikes a similar tone in its July 3 provincial outlook, expecting sales to grind higher through the second half of 2026 but stay below pre-pandemic norms until the second half of 2027.
3. Average Home Price Forecast, 2026–2028
| Source | 2026 Avg. Price | 2027 Avg. Price | 2028 Avg. Price |
|---|---|---|---|
| CMHC (Jul 22, 2026) | $675,200 (−0.6%) | $698,900 | $717,300 |
| CREA (Jul 15, 2026) | $686,710 (+1.1%) | $694,164 (+1.1%) | — |
| TD Economics (Jul 3, 2026) | ~−0.3% (annual avg.) | Modest acceleration | — |
4. Housing Starts: A Multi-Year Decline
Unlike sales and prices, where forecasters diverge, the housing-starts picture is unusually consistent: CMHC expects a decline in every year of its three-year forecast window, with condo starts in Toronto and Vancouver identified as the weakest segment. That has longer-term supply implications that could tighten conditions again once demand recovers in 2027–2028.
5. Regional Divergence: Prairies, Quebec, Ontario & B.C.
The national averages mask a genuinely two-speed housing market. Here's how the data breaks down by region:
- Prairies (Alberta, Saskatchewan, Manitoba): The strongest region nationally, supported by relatively favourable commodity prices and better-balanced supply and demand conditions.
- Quebec: Modest gains, with Montreal prices forecast to move higher in 2026 amid more balanced market conditions than Ontario or B.C.
- Ontario: The weakest major market — Toronto's average price is forecast to fall to roughly $1,020,000 in 2026, down from higher 2025 levels. Ontario is nonetheless the only province CREA forecasts for sales growth in 2026.
- British Columbia: Vancouver and Victoria are both expected to stay largely flat, weighed down by affordability constraints and slower population inflows.
- Atlantic Canada: A mixed, easing picture, though TD Economics flags Newfoundland and Labrador as a relative price outperformer.
6. Key Drivers & Risks
What's Holding the Market Back
- Slower population growth, reducing underlying housing demand
- Elevated borrowing costs relative to the pre-2022 era
- Modest household income gains that limit affordability improvement
- Geopolitical and trade uncertainty — including U.S.-related tariff factors temporarily lifting inflation
- Elevated inventories, particularly in the condo segment
- Rising construction costs weighing on new supply
What Could Support a Faster Recovery
- Gradual broader economic improvement into 2027–2028
- Pent-up buyer demand accumulated during the slowdown
- Potential relief in bond yields, which would ease fixed mortgage rates
- Easing rental markets, which may eventually free up renters to become buyers
7. Outlook Beyond 2026
Every major forecaster in this analysis — CMHC, CREA, TD, and RBC — describes the same broad arc: a subdued 2026, followed by gradual, uneven improvement in 2027 and further firming in 2028. None describe a sharp rebound. CMHC's own figures show sales recovering to 472,900 in 2027 and 485,500 in 2028, alongside average prices climbing to $698,900 and $717,300 respectively — but even the 2028 sales figure remains below the levels of the last decade. Housing starts, notably, are projected to keep declining through 2028 under CMHC's current outlook, which raises the possibility of renewed supply tightness once demand fully recovers.
8. Three Scenarios: Bull, Base & Bear Case
Bull Case (Faster Recovery)
Trade uncertainty fades, bond yields ease, and pent-up demand unlocks faster than expected. Sales and prices could track closer to CREA's more optimistic 2026–2027 path nationally, with Ontario and B.C. stabilizing sooner.
Base Case (Slow Grind)
Consistent with CMHC, TD, and RBC: 2026 stays soft nationally, regional divergence persists, and meaningful improvement doesn't arrive until 2027–2028.
Bear Case (Prolonged Softness)
Trade and geopolitical uncertainty persists longer than expected, borrowing costs stay elevated, and the starts decline compounds into a deeper long-term supply shortfall, delaying recovery beyond 2028.
Stakeholder Advisory: What to Do Right Now
For Homebuyers
- In Ontario and B.C., softer prices may create negotiating room — but affordability constraints mean this isn't a market to overextend your budget in, even at lower asking prices.
- In the Prairies and parts of Quebec, relative strength means less room for aggressive negotiation; move decisively if you find the right property.
For Sellers
- In Toronto and other softer Ontario/B.C. markets, price realistically against the forecast decline rather than 2025 comparables.
- Consider timing a sale for the second half of 2026 or into 2027, when TD and RBC both expect gradual sales improvement to begin.
For Real Estate Investors & Developers
- The multi-year decline in housing starts (241,400 → 223,400 → 211,900) signals a tightening long-term supply picture, particularly for condos in Toronto and Vancouver — a factor worth weighing against near-term softness.
- Regional selection matters more than the national headline: Prairies and Quebec fundamentals currently look meaningfully stronger than Ontario or B.C.
For Policymakers & Housing Analysts
- The gap between CMHC's and CREA's 2026 price forecasts (a decline vs. a modest increase) is itself a useful signal of genuine forecasting uncertainty in the current environment — plan for a range of outcomes, not a single point estimate.
- The continued decline in housing starts, even as demand is expected to recover from 2027, deserves particular policy attention given Canada's existing supply challenges.
9. Frequently Asked Questions
Will Canadian home prices go down in 2026?
It depends on the source. CMHC forecasts a modest 0.6% national average price decline in 2026, while CREA forecasts a 1.1% increase. TD Economics projects a smaller decline of around 0.3%. Regionally, Ontario and B.C. are expected to see the softest prices, while the Prairies and Quebec are comparatively stronger.
Is 2026 a good year to buy a house in Canada?
It depends heavily on region. Softer prices in Ontario and British Columbia may benefit buyers there, while the Prairies and parts of Quebec show relative strength with less room for negotiation. Every major forecaster expects only gradual improvement through 2027–2028, not a sudden shift in either direction.
Why are Canadian housing starts declining?
CMHC attributes the decline to weak demand, elevated construction costs, and high inventories, particularly in the condo segment in cities like Toronto and Vancouver. Starts are projected to keep falling through 2028 under CMHC's current forecast.
Which Canadian region has the strongest housing market in 2026?
The Prairies (Alberta, Saskatchewan, and Manitoba) are identified as the strongest-performing region, supported by relatively favourable commodity prices and better-balanced supply and demand. Quebec, particularly Montreal, is also showing modest gains.
When will Canada's housing market fully recover?
Every major forecaster describes a "slow grind" rather than a sharp rebound, with meaningful national improvement not expected until 2027, and further firming in 2028. Sales are expected to remain below pre-pandemic and 10-year average norms for some time even as the recovery progresses.
Related Post
Sources
- CMHC, "Summer Update: 2026 Housing Market Outlook" (July 22, 2026)
- CREA, Resale Housing Market Forecast revision (July 15, 2026)
- TD Economics, "Provincial Resale Market Outlook: Flickers in Ontario and B.C., Cooling Elsewhere" (July 3, 2026)
- RBC Economics, Monthly Housing Market Update (July 2026)
- The Globe and Mail, coverage of CMHC's July 2026 forecast update
- Canadian Mortgage Professional, Homeowner.ca, and Investment Executive — supporting coverage of the same CMHC data
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