The Canadian Real Estate Association (CREA) has once again revised its forecast for home sales activity in 2026, marking the third consecutive quarter of downgrades. The latest projections indicate that CREA anticipates a total of 444,530 homes will be sold by the end of 2026. This figure represents a 5.2 percent decrease from the previous year, a significant drop from their earlier forecast in July, which had expected only a 1.4 percent decline year-over-year.
In terms of pricing, CREA’s estimates suggest the national average home price will see a slight increase of 0.2 percent on an annual basis, reaching $681,681 by year-end. This is approximately $5,000 lower than earlier predictions made during the summer months. The report highlights that in September, the national average sale price fell by 1.6 percent compared to the same month in the previous year, settling at $666,538.
Furthermore, CREA's home price index, which aims to reflect the sale of typical homes across Canada, decreased by 0.4 percent from August to September. When looking at the year-over-year performance, the index recorded a more significant decline, dropping by 3.4 percent.
The report also sheds light on the state of national home sales, indicating a downturn of 7.7 percent in September compared to the same month last year. Comparatively, activity from August to September also fell by 2.3 percent. According to CREA senior economist Shaun Cathcart, this decline was unexpected following a four-month period of modest positive indicators in demand, supply, and pricing within Canada’s housing markets.
Shaun Cathcart remarked, “After a four-month run of modestly positive progress on demand, supply, and prices, many of Canada’s housing markets took a step back in September.” He attributed this regression partly to the recent uptick in fixed mortgage rates, with the Bank of Canada widely anticipated to implement another rate hike before the year concludes. Cathcart emphasized the pressing issue of housing affordability, stating that the overarching query is how much more the Bank of Canada will need to raise rates to maintain control over inflation in the coming year. The uncertainty surrounding this matter is likely to deter some buyers, pushing them back to the sidelines.
In summary, the Canadian real estate market is currently facing a challenging environment, with declining sales and prices amidst rising interest rates. The situation raises important questions about future affordability and the potential impact of monetary policy on home buying activity.
