Where Is the Canadian Real Estate Market Headed in 2025–2026?

The Canadian real estate market is changing direction. With homebuyers cautiously returning amid stable interest rates and regional affordability variations, CREA's revised projections for 2025 and 2026 show a more measured rebound than previously expected. Price growth is expected to taper off, while national sales are anticipated to increase gradually. This blog examines regional views, dissects the latest projection, and assesses the hazards still capable of disrupting the market. The 2025–2026 Canadian real estate market is expected to stabilize with easing interest rates, increased listings, and a gradual rebound in buyer confidence.

A Market in Transition

Following several erratic years, Canada's housing market is approaching a new equilibrium. Given shifting economic conditions, the Canadian Real Estate Association (CREA) revised its projection in April 2025, modifying expectations for the following two years. Although a recovery is still expected, it is now anticipated to develop more slowly and unevenly than initially predicted.

Since interest rates are likely to remain constant for most of 2025, some of the financial burden on prospective consumers is being alleviated. Still, consumer confidence suffers from continuous uncertainty brought on by local and worldwide economic conditions. Based on this balance, CREA sees only a modest nationwide average price increase and little change in home sales.

National Forecast: Growth, But at a Slower Pace

Following an expected 477,500 transactions in 2024, CREA now projects home for sales to increase by just over 1% in 2025. In 2025, that figure is expected to rise to 482,673 and then to 496,487 in 2026. Although this shows good momentum, it is not nearly as rapid as the fast rebounds expected in past forecasts.

Near-term prices are also expected to be essentially flat. Forecasting to be slightly lower in 2025 to $687,898—a 0.3% drop from the 2024 estimate of $689,000—the national average home price is expected to rise to $696,074 in 2026, a modest 1.2% increase.

Here’s how the revised forecast breaks down:

These numbers indicate a housing market that is gradually regaining balance, yet remains under pressure from affordability challenges and broader economic factors.

What's Influencing the Forecast?

The main reason behind this cautious approach to the CREA forecast for 2026 is the expected stability in interest rates. After a string of aggressive rate hikes aimed at fighting inflation, the Bank of Canada is now typically expected to maintain its current rates. Though still higher than the ultra-low levels seen during the epidemic, mortgage rates are no longer rising, which is encouraging some sidelined buyers to re-enter the market.

This has simultaneously slowed down economic development. Uncertainty about consumer spending, employment possibilities, and pay increases has many Canadians taking a wait-and-see attitude. Global risks, particularly mounting tensions with the United States over trade, have further complicated the picture. While they loom as possible disruptors in the months ahead, these geopolitical factors might not be fully reflected in current projections.

Pent-up demand also helps explain this slow and steady trend.  Many would-be purchasers have been waiting for evidence of improving conditions.  With interest rates now steady, this demand is expected to increase progressively through 2025 and beyond.  Rather than a quick comeback, the return is expected to be measured as consumers remain wary about financing and price.

Regional Breakdown: A Mixed Picture

National figures, as always, only tell part of the picture. Real estate situations vary greatly depending on the province across Canada. Due to increased inventory and long-standing affordability issues, British Columbia and Ontario are expected to experience a modest recovery in sales activity. Although prices may not rise, more homes buyers could enter the market with increased listings and stable borrowing conditions.

CREA forecasts continued to increase the price of the house in Alberta and Saskatchewan, which is inspired by strong economic performance and more affordable real estate than in other provinces. These provinces' already strong sales in 2024 could lead to limited supply, increasing price pressure through 2025 and 2026.

In Manitoba, Quebec, and Atlantic Canada, meanwhile, sales and prices are expected to show balanced increases. These markets benefit from their relative economic resilience and cost efficiency. Smaller cities are particularly likely to draw purchasers looking for value outside Toronto's and Vancouver's expensive metropolitan hubs.

Risks That Could Disrupt the Outlook

Although CREA’s forecast is cautiously optimistic, it’s not immune to risk.

If demand unexpectedly rises, particularly in markets with limited supplies, bidding wars and astronomical price hikes could follow. A recession, a fresh wave of inflation, or a rise in trade conflicts could, however, erode consumer confidence and slow down the recovery.

Immigration also generates more questions. Demand may be impacted in big cities, where newcomers account for a disproportionate portion of the housing market, as Canada has recently decided to restrict the entry of new permanent and temporary residents. Rising costs and supply chain issues limit the supply of homes, even as demand for them increases.

What This Means for You

The current environment presents buyers with a window of opportunity. Prices are stable, and competition remains more manageable than it did at the 2021 highs. Affordability remains a significant obstacle, so buyers should exercise caution not to overreach themselves, especially given the uncertain state of the economy.

Sellers should control their expectations. Although some regional markets might outperform others, the days of runaway price increases are mainly behind us. Attracting offers mostly in more competitive areas will depend on strategic pricing and appropriate home preparation.

Whichever side of the deal you are on, remaining current is more crucial than ever. This involves tracking immigration real estate trends, observing broader economic indicators, and monitoring policy changes from the Bank of Canada.

Final Thoughts: Measured Growth Ahead

The Canadian real estate market is not poised for a sudden decline or a rapid increase. Rather, CREA's most recent estimate suggests a slow but consistent period of development, marked by regional variances and tempered by economic uncertainty. Although the surroundings are improving, the environment remains complex; therefore, those wishing to buy or sell should proceed with great awareness of local conditions and careful planning.

If the last few years have shown us anything, navigating this market depends much on flexibility and accurate knowledge. 2025 and 2026 will be years of transition, regardless of your intended market entry or observation from the sidelines—years where wise decisions could make all the difference.

FAQs:

Q1: Will home prices rise in Canada between 2025 and 2026?​

 Prices are expected to remain mostly flat in 2025 and rise slightly by 1.2% in 2026.

Q2: Is now a good time to buy a home in Canada?​

 With prices stabilizing and competition easing, it may be a good time—if buyers remain financially cautious.

Q3: Which provinces will perform best?​

 Alberta and Saskatchewan are forecasted to show stronger growth due to affordability and local economic strength.

 Global economic conditions, rate changes, immigration policies, and housing supply issues could shift market trends.