CMHC Forecasts Decline in Canadian Home Sales and Prices

The Canada Mortgage and Housing Corporation released its 2026 Housing Market Outlook Mid-Year Update on July 22, downgrading its forecasts for the national housing market. The agency now predicts a decline in both home sales and prices for 2026, projecting 457,200 sales at an average price of $675,200, down from 470,314 sales at an average price of $679,543 in 2025. Housing starts are also expected to drop to 241,400 from 259,028 the previous year.

CMHC attributes this downturn to high borrowing costs, modest income growth, slower population growth, and economic uncertainty. Specific geopolitical drivers include the US-Iran conflict and trade tensions between Canada and the United States, particularly the threat of widespread tariffs affecting investment and hiring. While Prairie markets are expected to lead price growth, Ontario and British Columbia will likely face weaker activity and affordability challenges.

Deputy Chief Economist Kevin Hughes noted that price reductions have not yet been sufficient to bring buyers back into the market. The agency expects a gradual decline in housing starts as builders respond to high construction costs and elevated inventories. Rental markets in large centers like Toronto, Vancouver, and Montréal are seeing easing conditions due to new supply, though rents remain high relative to incomes nationwide. CMHC anticipates a return to modest growth in 2027 and 2028.