CMHC forecasts home price declines as housing slowdown deepens
Canada’s housing market is now expected to contract in 2026, with home sales, prices and housing starts all declining amid persistently weak demand, according to an updated forecast from Canada Mortgage and Housing Corporation.
CMHC expects 457,200 homes to change hands this year, down 2.8% from 470,314 in 2025. The national average price is forecast to fall 0.6% to $675,200 from $679,543.
The outlook represents a downgrade from CMHC’s February forecast, which had called for both sales and prices to increase this year.
The agency said economic uncertainty, slower population growth, high borrowing costs and modest income growth are limiting housing demand. Canada-U.S. trade uncertainty is also weighing on business investment and hiring, while geopolitical tensions are expected to add temporarily to inflation.
“Price reductions have not yet been enough to bring demand back into the market,” said CMHC Deputy Chief Economist Kevin Hughes. “Economic uncertainty, income growth and borrowing conditions all have played a role in sidelining buyers.”
CMHC expects sales and prices to return to modest growth in 2027 and 2028, although sales are projected to remain below the levels recorded over the past decade.
Regional divide expected to persist
Housing conditions are expected to vary across the country, with the Prairies leading in sales and price growth and Quebec recording more modest gains amid balanced market conditions.
Ontario and British Columbia, meanwhile, are expected to remain constrained by affordability challenges and weaker activity.
Housing starts are forecast to fall 6.8% to 241,400 units this year, from 259,028 in 2025, as builders respond to softer demand, elevated inventories and high construction costs. Construction is expected to remain weak through the forecast period, particularly in the condominium markets of Ontario and British Columbia.
Rental conditions should continue to ease as recently completed supply reaches the market. CMHC expects rising vacancy rates in Toronto, Vancouver and Montreal to slow rent growth, particularly for asking rents, although rents are likely to remain high relative to household incomes.
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Last modified: July 22, 2026
