CREA cuts 2026 home sales forecast a third time, sees 5.2% drop

The Canadian Real Estate Association now expects 444,530 homes to change hands on the MLS system in 2026, a 5.2 per cent drop from 2025, after cutting its national sales forecast for the third time this year.

The revised outlook, released Oct. 16 and reported by The Canadian Press, also trims the forecast national average price to $681,681, up 0.2 per cent from 2025 and about $5,000 below CREA’s summer projection, according to Canadian Mortgage Professional’s account of the release.

CREA’s forecasts have slid steadily. It projected 5.1 per cent sales growth for 2026 in January and a one per cent gain in April. By July it was calling for a 1.4 per cent decline. The latest cut removes 18,806 sales from the July estimate, Canadian Mortgage Professional reported.

For 2027, CREA expects a recovery to 464,235 sales, up 4.4 per cent, with the average price rising 1.2 per cent to $689,909.

The September data that fed the downgrade were weak. CREA reported sales fell 7.7 per cent from a year earlier and 2.3 per cent from August. The national average sale price dropped 1.6 per cent from a year earlier to $666,538, and CREA’s home price index slipped 0.4 per cent on the month and 3.4 per cent on the year. New listings fell 1.8 per cent from August, but active listings, at just over 200,000, were up 1.8 per cent from a year earlier.

CREA senior economist Shaun Cathcart tied the slowdown to borrowing costs. “This was hardly surprising given the latest jump in fixed mortgage rates,” he said. He added that “this fresh round of uncertainty will likely send some buyers back to the sidelines.”

Canadian Mortgage Professional reported that the five-year Government of Canada bond yield, which anchors fixed mortgage pricing, rose to 3.60 per cent on Oct. 2 from 3.35 per cent on Sept. 1.

TD economist Rishi Sondhi said the rise in borrowing costs was “probably the prime force behind September’s monthly decline,” the Canadian Press reported. Marco Pedri, a broker with Shoreline Realty, described the market as “a game of chicken,” adding: “It’s about who’s going to cave first.”

The provincial picture is split. CREA now forecasts Ontario’s average price to fall three per cent in 2026 to $809,334 and British Columbia’s to slip 0.8 per cent to $944,685, according to Canadian Mortgage Professional. Newfoundland and Labrador is forecast to rise 5.7 per cent and Saskatchewan five per cent.

RBC Economics reported that September resales fell 5.3 per cent from August in the Greater Toronto Area and 6.2 per cent in Greater Vancouver, with Victoria down 25 per cent, the steepest drop nationally. RBC economist Rachel Battaglia called the pattern a “bumpy recovery” and said RBC expects the recovery to continue “gradually with ups and downs.”

Royal LePage Canada president and CEO Phil Soper has described the stall as driven by confidence rather than fundamentals, with first-time buyers especially nervous about the trade war with the United States, Canadian Mortgage Professional reported.

The next test comes Oct. 28, when the Bank of Canada announces its rate decision. Dominion Lending Centres chief economist Sherry Cooper has said Canadians “have to expect higher interest rates.” CMHC chief economist Mathieu Laberge told the Mortgage Professionals Canada conference he does not “see rates going up anytime soon,” though he considers increases in 2027 probable. RBC expects a cumulative one-percentage-point rise in 2027.

Even if CREA’s 2027 rebound materializes, the forecast leaves the market recovering from a weak base, with prices roughly flat and sales still below the 2025 level.

Sources: Canadian Press via Advisor.ca; Canadian Mortgage Professional; Canadian Mortgage Professional on RBC Economics data.