As 2026 begins, Canada’s housing market appears to be settling into a period of gradual recovery rather than a sharp rebound. After several turbulent years marked by rapid rate hikes, falling sales, and uneven price corrections, economists now expect a more balanced environment defined by lower interest rates, cautious buyers, and restrained price growth.
Rate cuts delivered through 2024 and early 2025 have eased borrowing pressure and helped stabilize demand, particularly in markets that experienced the deepest slowdowns. At the same time, affordability constraints, high household debt, and regional supply imbalances are expected to limit how far and how fast prices can rise.
Below is a snapshot of key housing and interest rate forecasts for 2026 from major real estate firms and bank economists.
National Housing Market Forecasts for 2026
Canadian Real Estate Association (CREA)
- 2026 home sales forecast: 509,479 (+7.7% year-over-year)
- 2026 average home price forecast: $698,622 (+3.2%)
CREA says national home sales have been climbing steadily since March 2025, noting that demand was “delayed and dampened, but not derailed.” The organization expects lower borrowing costs to continue drawing buyers back into the market in 2026, supporting modest price growth rather than a rapid rebound.
Royal LePage
- 2026 national house price forecast by Q4: $823,016 (+1%)
Royal LePage president and CEO Phil Soper says lower interest rates, rising supply, and reduced competition have created a more favourable environment for buyers. While a sharp rebound is not expected, improved affordability could help rebuild confidence among both buyers and sellers, setting the stage for modest and more sustainable price growth.
RE/MAX Canada
- 2026 national average price outlook: -3.7% year-over-year
- 2026 national home sales outlook: +3.4% year-over-year
RE/MAX takes a more cautious view on pricing, projecting further modest price declines at the national level. However, the firm expects sales activity to continue improving as Canadians maintain interest in homeownership, particularly among first-time buyers finding creative ways to enter the market.
RBC Economics
- 2026 home resales forecast by Q4: 502,300 (+6.7%)
- 2026 home price forecast by Q4: $812,700 (-0.9%)
RBC economist Robert Hogue says signals from the Bank of Canada suggesting the rate-cut cycle is complete may be enough to unlock some pent-up demand. RBC expects past rate reductions and price declines in certain markets to draw buyers off the sidelines, supporting higher sales even as prices remain under pressure.
TD Economics
- 2026 home price growth forecast: +4.1%
TD economist Rishi Sondhi expects price growth to remain below historical trends overall, weighed down by looser supply-demand balances in British Columbia and Ontario. In contrast, tighter conditions in other regions could fuel stronger gains. TD highlights Quebec as a potential outperformer in 2026 due to seller-favourable market conditions.
Interest Rate Outlook for 2026
As housing forecasts stabilize, attention has shifted from how quickly the Bank of Canada might cut rates to how long it will remain on hold.
Most major banks expect the Bank of Canada overnight rate to sit at approximately 2.25% through much of 2026, reflecting a central bank that is broadly satisfied with inflation progress but cautious about declaring victory.
After an aggressive easing cycle in 2024 and early 2025, policymakers are widely expected to adopt a wait-and-see approach, guided by incoming inflation and labour-market data.
Diverging Views on What Comes After 2026
By late 2026, forecasts begin to diverge:
- Scotiabank and National Bank expect modest rate hikes by Q4 2026
- RBC sees rate increases extending into 2027, with the overnight rate potentially rising toward 3.25%
- TD Economics expects rates to remain unchanged through the end of 2027
- CIBC and BMO project rates holding steady through 2026, though longer-term forecasts remain unpublished
For borrowers, this suggests a period of relative stability rather than permanently lower rates. Most variable-rate relief appears to be behind us, with the next phase defined by an extended hold rather than further cuts. Fixed mortgage rates could gradually face upward pressure as markets begin pricing in future tightening.
The Bottom Line
Economists broadly agree that 2026 will be a year of measured recovery for Canada’s housing market. Lower interest rates are expected to support demand and lift sales, but affordability challenges, high debt levels, and uneven regional conditions should keep price growth contained.
On the rate side, stability is the dominant theme. While significant cuts are unlikely, the debate is shifting toward when, not if, the next tightening cycle begins as the economic expansion matures.
References
Canadian Real Estate Association. (2025). Housing market outlook and forecast. https://www.crea.ca
Royal LePage. (2025). House price survey and market forecast. https://www.royallepage.ca
RE/MAX Canada. (2025). Housing market outlook report. https://www.remax.ca
RBC Economics. (2025). Canada housing and interest rate outlook. https://thoughtleadership.rbc.com
TD Economics. (2025). Canadian housing market forecast. https://economics.td.com
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