CREA cuts 2026 home sales forecast amid rising mortgage rates

The Canadian Real Estate Association (CREA) has updated its forecast for residential property transactions in Canada, projecting a decline in home sales for 2026. According to a release published on Oct. 16, 2026, CREA now forecasts that 444,530 residential properties will trade hands via Canadian MLS® Systems in 2026. This figure represents a 5.2% decline from 2025 levels.

Drivers of the Downward Revision

CREA attributes the downward revision primarily to higher fixed mortgage rates and uncertainty regarding variable rates. The association notes that fixed mortgage rates increased in the spring following the start of the Iran conflict. Although rates cooled over the summer, they rose again in early September due to rising oil prices, global capacity and refinery disruptions, and a "notably more hawkish tone" from the Bank of Canada.

Markets are currently pricing in approximately 100 basis points of rate hikes by this time next year. CREA states that the shift in fixed-rate mortgage affordability, combined with variable rate uncertainty, has already resulted in lower home sales activity in September. The association describes the year as a "roller-coaster" for factors impacting housing markets, noting that 2025 was marked by tariff uncertainty, while 2026 has been defined by inflation risks from a global energy crisis.

Price Forecasts and Regional Variations

The national average home price is forecast to increase by just 0.2% on an annual basis to $681,681 in 2026. This figure is slightly lower but largely unchanged from CREA’s July forecast. The national average reflects a 0.8% decline in British Columbia and a 3% dip in Ontario. These declines are expected to be offset by slowing price growth in other provinces.

Outside of Ontario and British Columbia, average price growth is expected to remain in the low-to-mid single digits. The largest gains are forecast for Newfoundland and Labrador (+5.7%) and Saskatchewan (+5%). CREA notes that downward revisions to sales activity were spread evenly across all provinces except Newfoundland and Labrador, where the market remains very active.

Outlook for 2027

For 2027, CREA forecasts national home sales to climb 4.4% to 464,235 units. Most provincial markets are expected to see gains between 3% and 6%. The national average home price is projected to rise 1.2% from 2026 to $689,909 in 2027. This would mark the sixth and seventh consecutive years that the national average home price has hovered close to the $700,000 mark.

CREA’s 2027 forecast assumes limited action by the Bank of Canada over the next year and relies on slow but positive economic growth, the resumption of higher population growth, and increased certainty for borrowers regarding interest rates. The association’s next forecast is scheduled for publication in mid-January 2027.

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Sources

• financialpost.com: CREA Revises Resale Housing Market Forecast | Financial Post
• thestar.com: CREA downgrades home sales forecast for the third time this year

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.