2026 Canadian Housing Market Forecast: Complete Analysis
Data-driven insights from CMHC, Bank of Canada, and CREA to help you navigate the Canadian real estate market in 2025.
Key Takeaways for 2026
Interest Rates Dropping
Bank of Canada cut to 3.25% in Dec 2024, projected 2.25% by end of 2025
Price Recovery Expected
CREA forecasts 4.4% national price growth in 2025
Condo Market Struggles
Toronto condo starts at lowest since 1996, investor pullback continues
Trade Uncertainty
Potential US tariffs could impact economic growth and housing
Bank of Canada Interest Rate Trajectory
On December 11, 2024, the Bank of Canada reduced its policy rate by 50 basis points to 3.25%—the fifth consecutive cut since June 2024 and the second 50-basis-point reduction of the year. Governor Tiff Macklem signaled that restrictive monetary policy is no longer necessary as inflation hovers around the 2% target.
2024-2025 Rate Timeline
According to TD Economics , the Bank of Canada's lending rate is projected to reach 2.25% by end of 2025. Scotiabank economists believe rates will stabilize between 2.75% and 3.00%. The next rate announcement is scheduled for January 29, 2025.
National Housing Outlook from CMHC
The Canada Mortgage and Housing Corporation (CMHC) forecasts a period of "cautious recovery" for the Canadian housing market in 2025, with significant regional variations.
Positive Factors
- ✓Lower mortgage rates releasing pent-up demand
- ✓New CMHC rules increasing insured mortgage limit to $1.5M
- ✓Millennial buyers entering peak home-buying years
- ✓CREA forecasts 4.4% price growth nationally
Risk Factors
- ✗Potential 25% US tariffs on Canadian exports
- ✗Reduced immigration targets 2025-2027
- ✗Unemployment projected to rise until mid-2025
- ✗Ontario/BC facing slower price recovery
CMHC's Summer 2025 Update predicts Canadian average home prices may decline about 2% in 2025, with larger drops expected in Ontario and British Columbia due to ongoing affordability challenges and reduced immigration.
Toronto & GTA Market Analysis
According to the Toronto Regional Real Estate Board (TRREB) , 2024 was a "transitionary year" for the GTA housing market. Here's the December 2024 data:
GTA December 2024 Statistics
Average Selling Price
$1,067,186
-1.6% vs December 2023
Total Sales
3,359
-1.8% vs December 2023
New Listings
4,681
+20.2% vs December 2023
Average Condo Price
$703,217
-1% vs December 2023
Price Breakdown by Property Type
| Property Type | Avg Price | YoY Change |
|---|---|---|
| Detached (416) | $1,524,066 | -10.0% |
| Detached (GTA-wide) | $1,310,000 | -7.2% |
| Semi-Detached | $980,102 | -4.5% |
| Townhouse | $946,395 | -4.5% |
| Condo Apartment | $703,217 | -1.0% |
Toronto Condo Market Warning
According to CMHC analysis, Toronto's condo market is experiencing declining sales, rising inventories, and project cancellations. Condo starts have dropped to their lowest level since 1996. While a softer correction is expected compared to the 1990s (due to stricter lending standards), investors face significant challenges.
GTA Regional Price Analysis
York Region
Durham Region
Source: MoneySense GTA Affordability Analysis (January 2024 benchmark prices). Durham Region continues to offer the most affordable entry into the GTA market.
Income Required to Buy in 2025
According to Nesto's affordability calculator , here's what you need to earn to buy in the GTA (assuming 20% down payment):
Income Requirements by Property Type
Detached Home (GTA)
$1,360,400 benchmark
$269,000
annual income
Townhouse (GTA)
$795,000 benchmark
$157,000
annual income
Condo Apartment (GTA)
$682,600 benchmark
$137,000
annual income
The Affordability Gap
The median household income in Toronto is approximately $98,000, while the average is around $129,000. Both figures fall significantly short of the $137,000-$269,000 required to purchase a home in the GTA, creating one of Canada's largest affordability gaps.
Expert Predictions for 2026
CREA Forecast
The Canadian Real Estate Association predicts national average home prices will rise 4.4% in 2025 to approximately $713,375, aided by changes to CMHC mortgage rules increasing the insured mortgage limit to $1.5 million.
Source: Real Estate Magazine
CMHC Outlook
CMHC forecasts a 2% decline in average home prices in 2025, with larger drops in Ontario and British Columbia due to ongoing affordability challenges and reduced immigration targets for 2026-2027.
Rental Market
Purpose-built rental vacancy rates in the GTA increased to 3% in 2025—the first time since the pandemic. According to CMHC's Rental Market Report, this easing is driven by declining international migration and increased condo rental competition.
What This Means for You
For Buyers
- 1.Get pre-approved now to lock in rates before January 2025 announcement
- 2.Consider Durham Region for better affordability
- 3.Be cautious with pre-construction condos—investor pullback continues
- 4.Leverage increased buyer negotiating power (37% SNLR indicates buyer's market)
For Sellers
- 1.Price competitively—new listings up 20.2% means more competition
- 2.Stage your home (75% of sellers see 5-15% ROI from staging)
- 3.Consider soft-listing to test the market before committing to a realtor
- 4.Spring 2025 may offer better conditions as rates continue to drop
Data Sources
- • Bank of Canada: Key Interest Rate Announcements
- • CMHC: Housing Market Outlook
- • TRREB: Toronto Regional Real Estate Board Market Stats
- • TD Economics: December 2024 Rate Analysis
- • MoneySense: GTA Affordability Analysis