The Canadian Real Estate Association slashed its 2026 forecast downward, predicting just 474,972 home sales representing only a 1% increase after disappointing spring activity. March sales fell 2.3% year-over-year as the national average home price is expected to rise 1.5% to $688,955, with higher oil prices fueling inflation expectations that could trigger a Bank of Canada rate hike during peak buying season.
March sales dropped 2.3% year-over-year because spring is supposed to be the hottest season for real estate deals when first-time buyers make moves. First-time buyers have pent-up demand after waiting for affordability improvements, yet higher mortgage rates are keeping them on the sidelines, with British Columbia, Alberta, and Ontario showing virtually zero growth.
The national average home price still climbs 1.5% to $688,955, but that modest gain masks a market where higher borrowing costs are crushing affordability for middle-income buyers. When mortgage rates tick up just 0.5%, the monthly payment on a $400,000 mortgage jumps by hundreds of dollars, determining whether someone buys or rents another year as that gap between affordability and postponement shapes markets more than headline prices.
This slowdown reflects broader concerns about Canadian economic resilience as immigration inflows tighten and interest rates stay elevated longer than expected. Rental markets have also cooled as landlords and investors reassess returns, creating compound weakness across the entire housing sector, which suggests Canadians are delaying major purchases until they feel more confident about economic direction.
Canadian housing demand will remain stuck until either mortgage rates fall or buyer confidence in their jobs returns, whichever comes first for the recovery to gain real traction.
