Canada’s Housing Market Loses Steam as CMHC Cuts 2026 Price and Sales

By Tahani Elghazaly
Published July 22, 2026

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Canada’s housing market is performing weaklier than previously expected, prompting the Canada Mortgage and Housing Corporation to lower its forecasts for home prices, sales and new construction in 2026.

In its summer Housing Market Outlook update, released on July 22, CMHC projected that the national average home price will decline to approximately $675,200 in 2026, compared with $679,543 in 2025. The new estimate is also well below the agency’s earlier forecast of $698,000.

The housing agency now expects approximately 457,200 MLS home sales across Canada this year, down from 470,314 transactions recorded in 2025. CMHC’s winter outlook had projected 489,000 sales, indicating that the anticipated recovery is taking longer to materialize.

New home construction is also expected to slow. CMHC forecasts 241,400 housing starts in 2026, a decline of nearly 7 per cent from the 259,028 units started in 2025 and below its previous estimate of 247,000 units.

CMHC attributed the weaker outlook to slower population growth, continued economic and trade uncertainty, high mortgage rates and limited income growth. Buyers remain cautious, and improvements in affordability have not yet been strong enough to bring large numbers of households back into the market.

The agency expects sales to remain historically weak in Ontario and British Columbia, where affordability challenges and slower population growth continue to weigh on demand. Markets in the Prairies and Quebec are expected to perform more strongly, although activity may moderate from recent highs.

Housing construction is also expected to face continued pressure as developers deal with high building costs, weaker demand and inventories of unsold homes. The slowdown is expected to be particularly visible in the condominium sector in Ontario and British Columbia.

Rental market conditions, however, are expected to become more balanced. The completion of new purpose-built rental buildings and investor-owned condominiums will increase the number of available units, lift vacancy rates and slow rent growth.

The easing is expected to be most noticeable in Toronto and Vancouver, where slower population growth and a larger supply of rental condominiums are increasing competition for tenants. CMHC cautioned, however, that rents remain high relative to household incomes, particularly for tenants moving into newly listed units.

CMHC expects housing market conditions to improve gradually in 2027 and 2028 as economic growth, household incomes and buyer confidence recover. However, home sales are likely to remain below the average levels recorded over the past decade, while housing construction could remain under pressure for longer.