As Canada moves into 2026, the housing market remains in a prolonged reset rather than a sharp rebound or collapse. According to a range of economists, analysts, and housing experts cited by The Globe and Mail, the next phase of the market will be shaped by slower population growth, rising supply, changing affordability dynamics, and structural shifts in construction and rentals.
Rather than a single national outcome, experts expect 2026 to be defined by uneven conditions across regions, property types, and tenures.
Here are the seven major housing trends economists say will matter most in 2026.
1. Canada’s Housing Correction Is a Multi-Year Process
BMO Capital Markets senior economist Robert Kavcic says the housing correction that began in early 2022 was never expected to be short-lived.
Key forces that previously pushed prices higher have now reversed:
- Real borrowing costs have normalized after years of negative real rates
- Speculative price expectations have faded
- Many millennials are aging out of first-time buyer years
- Immigration growth has shifted from rapid expansion to tighter caps
According to Kavcic, housing valuations are still in the process of resetting from both affordability and investment perspectives. The adjustment is ongoing and unlikely to fully resolve in 2026.
2. Household Formation Is Slowing as Supply Grows
Macquarie Group economist David Doyle highlights a potential imbalance emerging over the next two years.
For decades, housing supply broadly tracked household formation. However, federal immigration policy now implies near-zero household growth in the short term, while housing starts and completions remain elevated.
If current policy holds, the gap may be resolved through:
- A slowdown in construction activity and project cancellations
- Improved affordability via lower prices and income growth
Doyle argues this rebalancing could be positive over the long term if capital shifts away from housing speculation and toward more productive investment.
3. Build-to-Rent Construction Is Surging
Capital Economics economist Bradley Saunders points to the rapid growth of build-to-rent development as one of the most important housing trends heading into 2026.
Build-to-rent starts have surged due to:
- Strong rental demand during peak immigration years
- Federal financing support for rental construction
- Low-cost loans and insurance programs through CMHC
In the third quarter, build-to-rent starts exceeded combined starts of new homes and condos for the first time on record. CMHC estimates that 88% of build-to-rent projects in 2024 received government-backed financing.
Saunders expects the trend to continue into 2026, supported by potential interest rate cuts and the federal government largely maintaining existing housing policies. However, slower immigration remains a headwind for rent growth.
4. Inventory Is Pressuring Prices in Major Markets
Central 1 Credit Union chief economist Bryan Yu says Canada’s housing market is increasingly two-speed.
Higher-priced markets such as Toronto and Vancouver continue to face:
- Weak sales activity
- Rising resale inventory
- Downward price pressure
Meanwhile, more affordable regions remain closer to record price levels. Yu notes that price stabilization in 2026 will depend on a reduction in:
- Resale inventory
- Newly built but unoccupied units
Without inventory normalization, price recovery and developer confidence may remain limited.
5. A Nationwide Rental Supply Wave Is Coming
Edge Realty Analytics founder Ben Rabidoux highlights an unprecedented surge in rental construction.
Nearly 180,000 purpose-built rental units are currently under construction across Canada, which could expand the national rental stock by more than 7% as projects complete.
The largest increases are expected in:
- British Columbia
- Alberta
- Atlantic Canada
This surge is arriving as population growth slows sharply. Rabidoux suggests Canada’s rental vacancy rate, currently 2.3%, could rise toward levels last seen in the early 1990s and potentially approach 5% nationally.
6. Affordability Gains May Be Limited in 2026
RBC Economics assistant chief economist Robert Hogue notes that falling prices and earlier rate cuts have improved affordability since 2024, particularly in Toronto, Vancouver, and Calgary.
However, further gains may be limited:
- The Bank of Canada is expected to hold rates steady through 2026
- Housing affordability remains far worse than pre-pandemic levels
- Demand is likely to recover gradually rather than surge
Slower immigration may also introduce volatility into demand patterns.
7. Housing Supply Targets Face Economic Headwinds
S&P Global Market Intelligence director Arlene Kish points to broader economic conditions shaping housing delivery.
Federal plans call for 290,000 to 480,000 new homes per year through 2035 to restore affordability to 2019 levels. Achieving that goal will require higher productivity, reduced red tape, and changes in construction practices.
At the same time:
- Manufacturing and construction job vacancies are near historic lows
- Firms report weaker demand and slower investment
- Labour demand in goods-producing sectors remains soft
These headwinds may complicate efforts to rapidly expand housing supply.
The Bottom Line
Economists broadly agree that 2026 will not mark a return to the housing boom of the early 2020s. Instead, Canada’s housing market appears to be entering a period of normalization defined by slower demand growth, rising supply, and uneven regional outcomes.
Affordability challenges remain unresolved, but structural changes in construction, rentals, and population growth may gradually reshape the market beyond 2026.
References
Kirby, J. (2026). Where is the Canadian housing market headed in 2026? Economists and analysts pick seven trends to watch. The Globe and Mail. https://www.theglobeandmail.com
Canada Mortgage and Housing Corporation. (2024). Rental market report and apartment construction statistics. https://www.cmhc-schl.gc.ca
Bank of Canada. (2025). Monetary policy outlook and housing market transmission. https://www.bankofcanada.ca
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