OTTAWA: Canada’s real estate market is experiencing a significant slowdown. Following a larger-than-expected drop in national home sales, the Canadian Real Estate Association (CREA) has once again lowered its housing sales forecast for 2026. This marks the third time this year that CREA has revised its market outlook due to ongoing real estate challenges.
According to the updated forecast, a total of only 444,530 homes are expected to be sold across Canada in 2026, representing a 5.2% decrease compared to the previous year. In its July forecast, CREA had projected a modest decline of just 1.4%; however, current market conditions prompted a steep downward revision.
Severe Setback in September
Home sales in September dropped by a sharp 7.7% compared to the same month last year, alongside a 2.3% month-over-month decline from August. Major Canadian real estate markets, notably Toronto and Vancouver, experienced the most pronounced sluggishness during September.
As sales softened, Canada’s national average home price fell 1.6% year-over-year to $666,538. Despite this, CREA expects the market to recover slightly in the coming years, projecting the 2026 annual average price to rise by 0.2% to $681,681.
Driven by Mortgage Rate Pressures
The market downturn has been fueled by rising fixed mortgage rates and growing concerns that the Bank of Canada may further increase interest rates to control inflation. CREA Senior Economist Shaun Cathcart explained that economic uncertainties have led many prospective homebuyers to temporarily put their purchasing plans on hold.
Financial experts suggest that Canada’s real estate sector will likely remain subdued until there is a meaningful easing of interest rates in the months ahead.
