Market Memo: Quarterly Report – Apr. 2026

The malaise that’s afflicting Canadian residential real estate has the analysts downgrading their forecasts. Inflation fears and concerns about interest rate increases appear to be keeping cautious buyers out of the market. 

Slowing Sales 

The Canadian Real Estate Association has tallied its first quarter figures and is trimming its estimates for this year and next. The Association is now projecting that the number of properties changing hands in 2026 will increase by about 1.0% over 2025, to 475,000.  That is a substantial pull back from the 5.1% increase forecast at the end of last year. 

Most of the activity for 2026 is expected to centre on British Columbia and Ontario (Vancouver and Toronto). CREA sees these markets as having the most room to recover. Sales are expected to rise only modestly, or even decline, in other provinces largely due to slowing population growth. 

Prices Soften 

Home price estimates have also been cut back. CREA predicts the national average price will increase by 1.5% to $689,000. That is down from the 2.8% increase forecast at the end of last year. CREA says price growth will be held in check by Alberta, B.C. and Ontario. Virtually no increases are expected in those three provinces. The rest of the country is expected to see price growth in the 3.0% to 5.0% range. 

2027 Outlook 

Looking ahead to 2027 CREA sees sales activity climbing by 2.1% over 2026 with the national average home price rising 0.9% to $695,000. 

Again, that is a notable reduction from the previous forecast which called for a 3.5% increase in sales and a 2.3% increase in price. 

Inflation and Interest Rates 

Much of CREA’s forecasting has been based on the idea that pent-up demand will start flowing into the market as prices stabilize and interest rates bottom out. However, prices have continued to decline, and the energy turmoil caused by the war in Iran is stoking inflation fears. That has led to expectations for interest rate increases. CREA believes many potential buyers see current rate hikes as short-term and those buyers are prepared to wait. 

“Higher mortgage rates are expected to curtail activity on their own, but the idea that the oil shock may be short lived will likely also cause many buyers to wait for rates to come back down, further dampening activity at the most active time of the year for housing markets,” CREA said in its forecast. 

New Builds 

The latest numbers for new home construction are also showing a pullback. Canada Mortgage and Housing Corporation reports housing starts dropped 6.0% in March compared to February. 

The seasonally adjusted annual rate of home starts now sits at a little less than 236,000 units. New builds totalled 259,000 units in 2025. 

CMHC says Canada needs another 4.8 million homes over the next decade in order meet affordability targets. That will require the construction of about 480,000 units per year.