Canada’s housing market appears to have passed its cyclical low, with home resales climbing for four consecutive months since April and price declines moderating in some of the country’s priciest cities. But economists and industry figures caution that the turnaround is fragile, geographically lopsided, and unlikely to deliver a swift return to pre-pandemic conditions.
According to a mid-year outlook from RBC Economics, national home resales are still projected to fall 3.6 per cent this year to 453,200 units, while the benchmark price index is expected to slip 2.3 per cent to $794,200 — a decline the bank attributes largely to weak activity over the winter and early spring. Robert Hogue, assistant chief economist at RBC, said the turnaround “has come too late to prevent Canada-wide declines” in 2026. A more visible recovery is expected in 2027, with RBC forecasting resales rising 6.7 per cent to 483,600 units and the benchmark price edging up 0.8 per cent to $800,700 — a pace Hogue described as an upturn that “won’t be transformative while welcome.”
Recent monthly data from the Canadian Real Estate Association (CREA) points in a similarly cautious direction. National home sales in July totalled 43,578, down 5.3 per cent from a year earlier but up 0.5 per cent month-over-month on a seasonally adjusted basis — the fourth straight monthly gain. The national average sale price was $674,819, up 0.2 per cent year-over-year, while CREA’s home price index was down 3.3 per cent annually but up 0.1 per cent from June. CREA senior economist Shaun Cathcart called the results “modestly positive,” noting that markets which had been too hot or too cold are drifting toward balance. Ontario, he said, was in buyer’s-market territory six months ago but is “already halfway back to normal levels.” Saskatchewan, New Brunswick and Newfoundland and Labrador remained borderline sellers’ markets in July.
Pent-Up Demand and a Healing Labour Market
RBC’s outlook rests heavily on the idea that hundreds of thousands of would-be buyers have delayed purchases in recent years because of high ownership costs. Hogue said many of these households have been “living longer than preferred in rented accommodation or delaying upsizing or downsizing current digs,” and RBC’s analysis of headship rates suggests the formation of more than 400,000 households may have been suppressed nationally since 2019. Savings among 25- to 34-year-olds are near a 25-year high, a cohort RBC sees as positioned to enter the market as conditions stabilize.
A rebounding economy is expected to reinforce that shift. Canada posted its strongest quarterly expansion in more than three years in the second quarter of 2026, and RBC expects GDP growth to persist through the end of 2027, tightening labour market slack by next spring. The Bank of Canada is expected to hold its policy rate through the remainder of 2026 before raising it in 2027, meaning further relief on borrowing costs is not anticipated. As Hogue put it, “we believe [rates] are as low as they will get this cycle.”
Even so, both TD and RBC note the recovery has been geographically concentrated. TD economist Rishi Sondhi said that over the past four months, “national sales gains have been almost exclusively driven by Ontario, where improved affordability — amid healthy supply and low sales levels — is gradually drawing buyers off the sidelines.” Phil Soper, president and CEO of Royal LePage, described the broader market as “healing” rather than taking off, adding that a divide between expensive and more affordable markets is narrowing but persists.
Regional Fault Lines Persist
RBC’s August tracking of Canada’s largest markets illustrates how uneven the recovery remains. Toronto’s resales fell 1.3 per cent on a seasonally adjusted basis in August, snapping an upward run that began in March, with the benchmark price index also declining from July. New listings in Toronto were down 14 per cent year-over-year, a steeper drop than the 2.1 per cent annual decline in sales. Ottawa, meanwhile, saw prices edge above year-ago levels for the first time since November 2025.
Vancouver remains the weakest of Canada’s six largest markets, though resales rose an estimated 8.5 per cent seasonally adjusted in August alongside a 12 per cent jump in new listings. Montreal continues to face what RBC calls affordability near an “all-time worst,” even as new listings climbed an estimated 7.1 per cent in August. Calgary cooled further, with resales slipping more than 9 per cent seasonally adjusted and condo prices sitting 8 per cent below year-ago levels, while detached home prices held up better, down just 1.1 per cent annually.
Risks to a Fragile Turnaround
Provincial forecasts diverge sharply. RBC projects Ontario resales to dip just 0.5 per cent in 2026 before rising 8.2 per cent in 2027, while British Columbia faces a steeper 4.6 per cent decline this year ahead of a 7.8 per cent rebound. Alberta stands out as comparatively resilient, with transactions forecast to rise 7.1 per cent and prices up 1.8 per cent in 2027. Brendan Ogmundson, chief economist at the British Columbia Real Estate Association, said households in that province will likely need “a prolonged period of stability to re-enter the market.”
Condo markets in Toronto and Vancouver are seen as an exception to any broader recovery, with high inventory and weak investor demand expected to keep prices under pressure, potentially into 2028. Hogue has counted four false starts in Canada’s housing recovery since 2023 and flagged trade-war escalation, geopolitical disruption and tighter immigration cuts as the likeliest sources of a fifth. The risk is not hypothetical: the United States imposed 50 per cent tariffs on roughly five per cent of Canadian exports on August 22, with Canada’s retaliatory tariffs set to begin September 8, and additional U.S. levies on autos and auto parts threatened for January 2027.
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