Canada’s housing market cooled slightly in August 2026, with national home resales slipping for the first time since spring, according to new data from the Canadian Real Estate Association. Despite the pullback, RBC Economics says the underlying fundamentals of the market remain intact.
CREA figures released this week show national MLS home sales fell 0.7 per cent on a month-over-month seasonally adjusted basis in August, bringing activity back to levels last seen in May. The decline snapped a five-month streak of incremental gains and came as renewed Canada-U.S. trade tensions weighed on buyer confidence and prompted more homeowners to list their properties.
Rachel Battaglia, an economist at RBC in Toronto who tracks provincial economies and housing trends, described the August slowdown as “more of a pause than inflection point” in the bank’s September monthly housing market update. She attributed the dip largely to trade-related uncertainty rather than any structural shift in the market’s direction.
Listings Rise as Sales Soften
New listings jumped 3.3 per cent month-over-month in August, reversing three consecutive months of decline. CREA Chair Garry Bhaura linked the increase to sellers trying to get ahead of the fall market, a trend he said was amplified by this year’s unusually late Labour Day.
The combination of higher listings and slightly lower sales pushed the national sales-to-new-listings ratio down to 49.1 per cent from 51.1 per cent in July. That figure remains within CREA’s definition of a balanced market, which spans roughly 45 to 65 per cent.
National inventory held at just under 200,000 properties, consistent with the historical average for August and up only 1.4 per cent from a year earlier, according to CREA’s September 15 release. Months of inventory stayed at 4.8 for a fourth straight month, slightly below the long-term average of five months.
The National Composite MLS Home Price Index was unchanged month-over-month, with the non-seasonally adjusted reading down 3 per cent from August 2025. CREA noted that gap is the smallest annual decline since October 2025, which Battaglia pointed to as a sign that price weakness continues to ease. The non-seasonally adjusted national average sale price was $668,219 in August, up 0.6 per cent from a year earlier.
A Fragmented Regional Picture
RBC’s analysis points to growing divergence between regional markets. Vancouver, identified by RBC as one of the softest markets in the country, saw resales tick up in August and surpass 2,000 units for the first time in nine months, even as prices kept drifting lower.
Toronto showed a similar pattern, with home prices edging down slightly in August after modest gains in June and July. Ottawa stood out with a more encouraging signal: annual growth in its MLS Home Price Index turned positive for the first time in 2026, a development RBC called an important milestone, though one that could still see volatility before sustained price gains take hold.
Elsewhere, Atlantic Canada, Quebec, and parts of the Prairies continued to post year-over-year price gains, although the pace of appreciation has been slowing. RBC noted pockets of seller-market conditions persisting in cities such as Saskatoon, Regina, Winnipeg, Sherbrooke, Saint John, and Halifax, albeit with weakening momentum. In most of Ontario and British Columbia, prices remain below year-ago levels, even as the rate of decline continues to moderate.
Interest Rates Remain the Key Uncertainty
RBC’s baseline outlook calls for gradual stabilization through the second half of 2026 and into 2027, but the bank stresses that any recovery is likely to be regional and incremental rather than nationwide. It points to new listings still running below year-ago levels as a factor helping to contain inventory growth and limit the risk of a sharper price correction.
The main uncertainty going forward is the direction of interest rates. CREA’s Senior Economist Shaun Cathcart noted that the Bank of Canada has recently flagged rising inflation risks, and that fixed mortgage rates have already risen alongside higher bond yields. Markets are now pricing in the possibility of a rate hike before year-end, a scenario Cathcart said could further slow housing market momentum heading into 2027.
The Bank of Canada held its overnight rate at 2.25 per cent at its September 2026 meeting, its sixth consecutive hold, while flagging heightened inflation risks tied to energy prices and renewed U.S. tariffs on Canadian exports, according to a September 2, 2026 report from Trading Economics.
Battaglia concluded that with interest rate certainty limited, any future pickup in housing activity is likely to be gradual, and that the August softness does not alter the broader trajectory the market has been on since the start of the year.
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