The Canadian Real Estate Association has downgraded its forecast for home sales activity in 2026 for the third straight quarter. CREA now expects a total of 444,530 homes to be sold by the end of this year, representing a 5.2 per cent decrease from 2025. That’s down from its July forecast of a 1.4 per cent year-over-year decline, which marked a reversal from its April forecast of a one per cent gain. The association had predicted 5.1 per cent growth year-over-year in January. CREA also projects the national average home price to tick 0.2 per cent higher on an annual basis to $681,681 this year, which is around $5,000 lower than predicted in the summer. The association said its revised forecast comes amid a “roller-coaster year,” with the global energy crisis fuelling inflation risks and affecting borrowing costs. It cited higher fixed mortgage rates and ongoing uncertainty around variable rates, adding that the Bank of Canada has adopted “a notably more hawkish tone.” Those factors hurt September’s residential real estate activity, CREA said. National home sales were down 7.7 per cent compared with the same month last year, while activity also fell 2.3 per cent from August. “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,” said CREA senior economist Shaun Cathcart in a news release. “This was hardly surprising given the latest jump in fixed mortgage rates, and with the Bank of Canada now widely expected to follow with a rate hike before the end of the year.” Worries about higher borrowing costs on the horizon led to a “significantly” shorter fall market compared to usual expectations for the season, said Marco Pedri, a broker with Shoreline Realty. He said many of those considering a home purchase already made their move in the summer or first few weeks of fall “in an effort to lock in a favourable interest rate.” That’s left remaining sellers in limbo, and they’ll likely have to wait until next year before demand picks up again. “It’s honestly a game of chicken. It’s about who’s going to cave first,” Pedri said. “I think lot of purchasers ... are going to try and see what best deal they can get come January, February, March, when these sellers who have had their property on the record for so long may be at a point to just say, ‘Hey, listen, at this point, I just want to sell.”’ In September, the national average sale price fell 1.6 per cent compared with the same month a year earlier to $666,538. CREA’s own home price index, which aims to represent the sale of typical homes, edged 0.4 per cent lower from August to September, while the index dropped 3.4 per cent on a year-over-year basis. The number of newly listed properties decreased 1.8 per cent month-over-month. Slightly more than 200,000 properties were listed for sale by the end of the month, up 1.8 per cent from a year earlier. “While the Canada/U.S. trade war has recently escalated, and inflation concerns likely remain top-of-mind for Canadians, the rise in borrowing costs was probably the prime force behind September’s monthly decline in home sales and average prices,” said TD economist Rishi Sondhi in a note. “Looking to 2027, we look for weak price growth across most regions next year, with loose supply/demand balances providing an additional drag on prices in B.C. and Ontario.” CREA said it now forecasts national home sales in 2027 to improve by 4.4 per cent to 464,235. The prediction bakes in slow but positive economic growth, the resumption of higher population growth, and more certainty for borrowers around the path for interest rates. CREA said the latter should bring more pent-up demand into the market even with higher borrowing costs. The national average home price is expected to rise 1.2 per cent from 2026 to $689,909 next year. With housing affordability already stretched, Cathcart said “the big question going forward is how much farther will the (Bank of Canada) have to go to keep a lid on inflation next year?” “Until that becomes clearer, this fresh round of uncertainty will likely send some buyers back to the sidelines,” he said. --- Sammy Hudes, The Canadian Press This report by The Canadian Press was first published Oct. 16, 2026.
