CMHC Report Links Housing Crisis to Supply Shortage

The Canada Mortgage and Housing Corporation (CMHC) released research on October 20, 2026, revealing that inflation-adjusted house prices in Canada have more than doubled since 2005. The findings indicate that Canada has fewer homes per capita than comparable developed nations, leaving the country more vulnerable to affordability pressures. Deputy Chief Economist Aled ab Iorwerth noted that the primary driver of this crisis is that demand grew faster than supply for a longer duration than in similar countries.

This affordability crisis coincides with a volatile economic environment. Financial institutions and swap market data suggest an 87 per cent probability that the Bank of Canada will raise its policy rate during its October 28 meeting to combat inflation, which rose to 3.1 per cent in September. The current rate has remained at 2.25 per cent since October 2025, but soaring energy costs are driving expectations for a 25-basis point hike.

Economists warn that further rate increases could destabilize a housing market already struggling with weak buyer confidence and a 25-year low in sales volume. In response to the central bank's hawkish tone, the Canadian Real Estate Association has downgraded its home sales forecast for 2026.