A housing market rebound in 2026 is unlikely based on the latest numbers released Thursday by the Canadian Real Estate Association (CREA), according to economists.
Sales and Prices Remain Weak
April sales rose 0.7 per cent from the month before, but Douglas Porter, chief economist at Bank of Montreal, noted that “no one is going to mistake that for a sign of spring for the chilly housing market.” Sales remain four per cent below year-ago levels and 10 per cent off the norm for this time of year. Home prices are down four per cent from a year ago and 20.5 per cent off the pandemic peak in February 2022.
“At this point in the year, the chance for a full-blown housing rebound has likely slipped away,” said Clay Jarvis, who covers mortgages at NerdWallet Canada.
Mixed Signals Across Regions
Toronto-Dominion economist Rishi Sondhi was slightly more optimistic, noting that Ontario posted a “solid” sales gain of 4.3 per cent month over month and the average home price across Canada rose 2.6 per cent in April from March. However, the sales-to-new-listings ratio remains “well below the long-term average,” signaling modest price growth ahead. TD expects an increase in prices and sales for the second quarter, but Sondhi said this “will likely only partially retrace significant first-quarter weakness, leaving an overall subdued picture for the first half of the year.”
Economic Headwinds Persist
Sondhi highlighted that the once-hot housing market faces plenty of economic headwinds, including weak population growth, elevated supply in key markets, and a “shaky” jobs picture. Porter added that the current sales-to-new-listings ratio points to a further contraction in prices and indicates “little prospect for a quick turn anytime soon.” He said further price decreases are needed to improve affordability, which remains far below historical norms despite recent price declines and a drop in interest rates.
Regional Cooling Spreads
On a provincial basis, Ontario and British Columbia, the country’s housing heavy hitters, had been the biggest drags on the overall market. Now, other “once-solid” regions are showing signs of cooling. For example, sales dropped by double digits in Edmonton, Winnipeg, and Halifax, while previously “sizzling” Calgary posted a nearly 10 per cent drop in sales and a decline in its home price index.
“Given the lingering affordability issues in many regions of the country, and the now-distant prospect of any further rate cuts by the Bank of Canada, it’s tough to see the market springing to life anytime soon,” Porter concluded.
