The Canadian Real Estate Association (CREA) has issued its third consecutive quarterly downgrade for the 2026 housing mraket. The organization now anticipates a 5.2 per cent decline in home sales compared to 2025 levels.
A 5.2 per cent slide in 2026 sales volume
The Canadian Real Estate Association (CREA) has significantly lowered its expectations for the Canadian housing market's performance in 2026. according to the latest report, the association now expects a total of 444,530 homes to be sold by the end of 2026, which represents a 5.2 per cent decrease from the previous year.
This projection marks a sharp departure from the association's July forecast, which had only predicted a 1.4 per cent year-over-year decline. This is the third time in a single year that CREA has revissed its outlook for 2026 sales downward, suggesting a growing pessimism regarding market liquidity and buyer demand as the industry moves through the current economic cycle.
Softening indices and the $681,681 price target
While sales volumes are expected to drop, the Canadian Real Estate Association projects the national average home price will see a marginal increase of 0.2 per cent to $681,681 in 2026. However, this figure is notably lower than the price levels predicted during the summer months, indicating that the expected appreciation is losing steam.
Recent data from September suggests that price pressure is already easing across the country. As reported by The Canadian Press, the national average sale price in September fell 1.6 per cent year-over-year to $666,538. furthermore, the CREA home price index, which tracks typical home sales, dropped 3.4 per cent on a year-over-year basis, highlighting a broader trend of softening values.
Mortgage rate volatility and the Bank of Canada's influence
Rising borrowing costs are acting as a primary headwind for Canadian homebuyers. CREA senior economist Shaun Cathcart noted that many housing markets experienced a pullback in September following a brief four-month period of modest progress in demand, supply, and prices.
Cathcart attributed this recent decline to a jump in fixed mortgage rates. The economist also noted that the market is reacting to the widespread expectation that the Bank of Canada will implement another rate hike before the end of the year. This combination of high existing rates and the threat of further increases is pushing many potential buyers to the sidelines, waiting for more stability.
How much further must the Bank of Canada go to curb inflation?
The central question for the Canadian housing market remains the ultimate trajectory of monetary policy. While the current slowdown is linked to existing rates, the long-term stability of the market depends on the Bank of Canada's ability to manage inflation without causing a deeper contraction in the economy.
Several specific questions remain unanswered by the current data. first, it remains unverified how many additional rate hikes the Bank of Canada will require to reach its inflation targets. second, the report does not specify which particular Canadian regions will experience the most severe sales declines. Finally, while the report highlights the impact of fixed mortgage rates, it does not detail how much relief—if any—is expected from the variable-rate segment in the coming months.
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