TD Economics has revised its predictions for home sales and prices in 2026, projecting a decline rather than an increase as previously forecasted. The latest outlook anticipates a 1.8% year-over-year drop in sales and a 0.3% decrease in national home prices. These adjustments come after lackluster performance in the housing market during the last two quarters.
Economist Rishi Sondhi explained that it may take most of the year for the housing sector to recover from first-quarter setbacks due to factors such as a sluggish economy, heightened uncertainty, and persistent cost-of-living pressures. The report highlighted that Ontario and British Columbia experienced the most significant declines in both sales and prices in the first quarter, with buyers in these provinces facing substantial affordability challenges and potentially waiting for market stabilization.
The revised projections indicate a departure from the initial expectations of a 9.3% increase in home sales and a 4.1% rise in average prices for the year. TD Economics now foresees a 3.2% reduction in Ontario home transactions and a 0.2% decrease in B.C., along with price declines of 4% in Ontario and 1.2% in B.C. Sondhi noted that pent-up demand has been slower to materialize in these regions, suggesting that further price adjustments may be necessary to stimulate market activity.
While risks persist, such as potential geopolitical tensions impacting oil-producing regions and importers, the report also points to the upcoming CUSMA negotiations as a significant factor for the broader economy and housing market outlook. Looking ahead to 2027, TD Economics predicts a rebound in Canadian home sales driven by improved economic conditions, with an expected 9.6% increase in sales and a 2.7% rise in average prices for that year.
