TD Economics sharply lowered its 2026 forecast for Canadian home sales and prices, announcing on March 26, 2026, that it no longer expects either to rise this year. The revised outlook follows weak market performance over the past two quarters.

The financial institution now projects national home sales to fall 1.8 percent year-over-year, on average, and home prices to edge down 0.3 percent nationally.

Forecast Reversal

The new projections represent a significant reversal from TD’s December forecast. Previously, the bank anticipated a 9.3 percent year-over-year increase in home sales for 2026, alongside a 4.1 percent rise in average home prices.

Economist Rishi Sondhi stated that housing activity will likely take most of the year to recover from first-quarter losses. He attributed constrained sales to a subdued economy, heightened uncertainty, and ongoing cost-of-living pressures.

“While severe weather in Central and Atlantic Canada weighed on activity early in the year, weakness was also evident in B.C., where conditions were more temperate,” Sondhi said in a report.

Regional Impacts

TD’s report issued the steepest downgrades for sales and prices to Ontario and British Columbia, citing “significant” first-quarter declines. Potential buyers in these provinces face substantial affordability challenges and likely await a market bottom.

• Ontario: Sales now forecast to fall 3.2 percent (previously +13 percent); prices to fall 4 percent (previously +0.6 percent).
• British Columbia: Sales now forecast to dip 0.2 percent (previously +15.1 percent); prices to decline 1.2 percent (previously +3.6 percent).

Sondhi noted that pent-up demand “has yet to re-emerge as quickly as previously expected” in these provinces, suggesting further price declines may be necessary to stimulate activity.

Economist’s Insights and Risks

Canada’s benchmark home price fell 4.8 percent in February compared to last year, according to the Canadian Real Estate Association (CREA). This decline underscores the sluggish market conditions.

Sondhi cautioned about remaining risks to the forecast. He highlighted a broader or more prolonged escalation of tensions in the Middle East, which could support activity in oil-producing regions but weigh more heavily on oil importers. This scenario could also unleash pent-up demand in Ontario and B.C. “faster or more forcefully than expected.”

Upcoming CUSMA negotiations also loom large for the broader economy and the housing market, Sondhi added.

Looking Ahead to 2027

Despite the immediate challenges, TD’s report forecasts a rebound in Canadian home sales in 2027. Improved economic and job market conditions are expected to drive this recovery, potentially lifting the national average price.

TD currently expects:

• Home sales to jump 9.6 percent year-over-year in 2027.
• Average prices to increase 2.7 percent in 2027.

Why This Matters

TD Economics’ sharp downgrade of its 2026 housing market forecast signals a prolonged period of adjustment for Canadian real estate. This shift impacts potential homebuyers, who may find more favorable conditions as prices decline, and sellers, who face a more challenging market than previously anticipated. The revised outlook reflects persistent economic headwinds, including high cost-of-living pressures and a subdued economy, which continue to deter demand. For policymakers, these projections highlight ongoing affordability issues, particularly in high-cost regions like Ontario and British Columbia, and underscore the need for strategies that address housing supply and demand imbalances. A delayed rebound to 2027 suggests that market stability and growth will require sustained improvements in broader economic and job market conditions, making the housing sector a critical indicator for Canada’s overall economic health.