Quarterly Report – January 2026

It was a quiet close to the year for Canada’s housing market, for both new and resale homes.

The Canadian Real Estate Association reported December home resales were down 2.7% from November and fell 4.5% compared to December of 2024.  Total sales for 2025 were 470,314 units, down 1.9% from 2024.  CREA’s Home Price Index (HPI) slipped 0.3% month-over-month and was down 4.0% year-over-year.

Canada’s, realtors are forecasting a resurgence in activity this spring.  Their projections are based on pent-up demand, first-time buyers and stable interest rates.  The Bank of Canada cut its trend-setting Policy Rate four times in 2025, bringing it to 2.25%.  The Bank has made it clear that it is unlikely to move the rate, up or down, unless there is a pressing economic need to do so.  CREA believes predicable interest rates will help draw buyers back into the market.

“For homebuyers and those approaching renewals stability matters,” says Phil Soper, president of Royal LePage.  “Borrowing costs have stabilized at a level that supports healthy market activity.  Buyers can move forward without worrying they are missing out on cheaper money tomorrow.  That clarity alone will unlock demand.”

Looking at new homes, the Canada Mortgage and Housing Corporation reported a healthy 5.6% increase in housing starts for 2025, with 259,000 units getting underway, driven by rental construction.  Unfortunately, the federal housing agency says those numbers still come up far short of what is needed to meet affordability targets.  CMHC says Canada needs another 4.8 million homes over the next decade, which requires the construction of, as many as, 480,000 units a year.

Some market watchers do see the potential for some relief from the need for construction.  They point to lower, federal immigration targets which could reduce the demand for housing.  This is a double-edged sword though.  Vacancy rates may well improve while, at the same time, the incentive for more construction could decline.

CREA is forecasting nearly 495,000 residential properties will change hands in 2026, up 5.1% from 2025.  Most of that gain is expected in British Columbia and Ontario “where sales have more room to recover”.

The national average home price is expected to rise by 2.8% to $699,000 in 2026, which is in line with inflation.  B.C. and Ontario are expected to reverse price declines while markets that experienced strong price growth, like Saskatchewan, Quebec, and Newfoundland and Labrador will likely see smaller increases.

In 2027, national home sales are forecast to climb 3.5% to 512,000 – again led by B.C. and Ontario – while the national average price is forecast to rise 2.3% to $715,000.

CMHC predicts total housing starts will decline but stay above the 10-year average, with rental construction remaining high but potentially easing by 2027.