Canada Cuts 2026 Home Sales Forecast to 444,530 as Rate Outlook Darkens

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Canada’s real estate industry has sharply lowered its expectations for 2026 home sales, projecting a 5.2% annual decline as higher mortgage rates and renewed inflation concerns threaten to keep buyers sidelined through the final months of the year.

The Canadian Real Estate Association now forecasts 444,530 residential transactions through MLS systems in 2026, compared with 463,336 in its July outlook. The reduction of 18,806 projected sales reflects weaker expectations for the final four months of the year, according to CREA’s October 16 forecast release.

The association also cut its price outlook. The national average selling price is projected to rise only 0.2% this year to C$681,681, compared with July’s forecast of a 1.1% gain to C$686,710. Those are annual averages, not predictions for December home values or the benchmark price of a typical property.

Higher mortgage rates reverse the summer narrative

The revised outlook follows a volatile year for energy markets and borrowing costs. CREA said fixed mortgage rates jumped after the conflict involving Iran, moderated during the summer and then climbed again as oil prices rose and expectations for Bank of Canada tightening intensified in September.

Market pricing for future rate increases is not a commitment by the central bank. CREA’s release notes that investors have been pricing in about 100 basis points of increases over the next year, while forecasters generally anticipate less tightening. The gap between market pricing and economist expectations adds uncertainty for mortgage borrowers choosing between fixed and variable terms.

CREA’s September sales report, released the same day, showed a 2.3% monthly drop in transactions and a 7.7% year-over-year decline in unadjusted sales. Those completed figures help explain the downgrade, but the association’s full-year numbers remain forecasts and can change again.

Ontario and British Columbia lead expected price weakness

CREA expects Ontario’s average selling price to decline 3% in 2026 and British Columbia’s to fall 0.8%. Those decreases are expected to be offset nationally by continued, though slowing, gains in other provinces. Newfoundland and Labrador is projected to post a 5.7% increase and Saskatchewan a 5% gain.

That geographic split matters for mortgage originators and brokerage businesses with concentrated footprints. A national price forecast near zero can conceal meaningful local changes in borrower equity, loan demand, appraisal outcomes and seller expectations.

For 2027, CREA expects sales to rebound 4.4% to 464,235, with most provinces posting gains between 3% and 6%. The association projects the national average selling price will rise 1.2% to C$689,909. Those estimates assume slow but positive economic growth, renewed population growth and more certainty about interest rates.

They should not be read as a guarantee that lower mortgage costs are coming. CREA explicitly identifies the path of monetary policy as a major uncertainty. A stronger-than-expected inflation trend could mean financing stays expensive longer, reducing the number of buyers who qualify even if sellers moderate prices.

Compared with CREA’s July outlook, the 2027 sales forecast is also lower: the association previously expected 480,567 transactions. The latest projection is 16,332 fewer sales, indicating that the downgrade extends beyond a temporary autumn slowdown.

Canada’s experience offers a broader lesson for housing markets facing high borrowing costs: modest price concessions do not necessarily generate a rapid recovery in transactions. Financing conditions, income growth, confidence and the regional supply of homes all affect how quickly buyers return.

CREA plans to publish its next quarterly forecast in January 2027. Until then, monthly sales and listings, mortgage pricing and Bank of Canada decisions will provide the clearest tests of whether the weaker forecast is proving accurate.