Canada Housing Market

Canada’s housing outlook for 2026 has taken a sharp turn.

A new report from TD Economics now expects both home sales and prices to decline this year, reversing earlier forecasts that called for a strong rebound.

TD Now Expects Sales and Prices to Decline in 2026

TD Economics is forecasting a weaker housing market than previously expected, citing continued economic pressure and soft demand.

Key national projections for 2026 include:

• Home sales expected to fall 1.8% year-over-year
• Average home prices projected to decline 0.3%

This marks a major downgrade from TD’s December outlook, which had predicted a 9.3% increase in sales and a 4.1% rise in prices.

Weak Start to the Year Triggered the Downgrade

The revised forecast comes after underwhelming housing activity over the past two quarters.

According to TD economist Rishi Sondhi, the market is being held back by several factors:

• A subdued economic environment
• Ongoing cost of living pressures
• Elevated uncertainty among buyers

He noted that it may take most of 2026 for the market to recover from early-year losses.

Ontario and B.C. Face the Sharpest Corrections

The largest downward revisions were seen in Ontario and British Columbia, where affordability challenges remain most severe.

Ontario Outlook

• Home sales expected to decline 3.2% in 2026
• Prices forecast to fall 4%

This is a significant shift from TD’s earlier forecast of a 0.6% price increase.

British Columbia Outlook

• Home sales expected to dip 0.2%
• Prices projected to decline 1.2%

Previously, TD had expected price growth of 3.6% in the province.

Buyers Still Waiting on the Sidelines

TD notes that pent-up demand has not returned as quickly as anticipated.

Many potential buyers are holding off, waiting for further price declines or improved affordability before re-entering the market.

This hesitation is contributing to slower transaction volumes and downward pressure on prices.

External Risks Could Shift the Outlook

The report highlights several risks that could change the trajectory of the housing market.

Global geopolitical tensions, particularly in oil-producing regions, could impact economic conditions across Canada. In some scenarios, this could accelerate demand in certain provinces while weakening it in others.

Upcoming trade negotiations under CUSMA are also expected to play a role in shaping the broader economic outlook.

Rebound Expected in 2027

Despite the weaker outlook for 2026, TD expects a recovery to begin in 2027.

Forecasts for next year include:

• Home sales rising 9.6% year-over-year
• Average home prices increasing 2.7%

Improved economic conditions and a stronger job market are expected to support that rebound.

What This Signals for Buyers and Sellers

TD’s revised outlook suggests that Canada’s housing market may remain under pressure throughout 2026.

For buyers, softer prices and less competition could create opportunities, particularly in high-cost markets like Ontario and B.C.

For sellers, expectations may need to adjust as demand remains cautious and price growth stalls.

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References

TD Economics. (2026). Canadian Housing Market Outlook Update. Retrieved from https://economics.td.com
The Canadian Press. (2026, March 26). TD slashes housing market forecast for 2026. Retrieved from original publication

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