TD slashes 2026 Canadian housing forecast
TD Economics’ latest provincial housing outlook marked a sharp reset in expectations for 2026, underscoring how quickly momentum has faded after last year’s tentative recovery.
The revised call matters for lenders and brokers who have been positioning for a more active resale market and some relief on pricing power.
Instead of the gains it projected as recently as December, TD now expects national home sales to fall 1.8% on average this year, with the national benchmark price edging 0.3% lower. That put the bank well to the cautious side of the Canadian Real Estate Association, which still forecast a 5.1% rise in 2026 resales and a 2.8% increase in the national average price.
Ontario and B.C. stay stuck on the sidelines
Economist Rishi Sondhi said it would likely take most of 2026 for activity to claw back first‑quarter losses as buyers remained hemmed in by a soft economy and cost‑of‑living strain.
“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,” he said.
Ontario and British Columbia took the steepest downgrades. TD now expects transactions to fall 3.2% in Ontario and 0.2% in B.C., with prices slipping 4% and 1.2% respectively, as strained affordability and falling prices kept many households “waiting for a clearer bottom,” the report said.
Pent‑up demand in those provinces “has yet to re‑emerge as quickly as previously expected,” Sondhi said, adding that further price declines might be needed to unlock it.
Oil‑producing regions and Prairies offer rare bright spots
Sondhi highlighted a split emerging across the country. In the Prairies, tighter starting conditions in Saskatchewan and Manitoba and still‑decent affordability are expected to support firmer gains, with Alberta’s market rebalancing as new supply meets normalized demand.
Higher oil prices are “a net positive for Alberta, Saskatchewan and Newfoundland and Labrador,” with TD’s models suggesting prices in Alberta could be about 1% higher by late 2026 than under its prior oil path.
He also warned that Middle East tensions could “support activity in oil‑producing regions but weigh more heavily on oil importers,” while upcoming Canada-United States-Mexico Agreement (CUSMA) talks loom as another risk. Those same shocks could also unleash pent‑up demand in Ontario and B.C. “faster or more forcefully than expected,” Sondhi said.
Forecasts diverged but pointed to a long, slow grind
Other forecasters have already been preparing the industry for a drawn‑out adjustment. Earlier TD work framed 2025‑26 as “a gradual, modest recovery in the housing market,” led by uneven regional rebounds rather than a broad‑based boom.
Royal Bank of Canada projected only modest sales and price moves through 2026, with the steepest declines also concentrated in Ontario and B.C. as high inventory and intense seller competition weighed on values.
Canadian Real Estate Association (CREA)’s January forecast, meanwhile, still leaned on “pent‑up demand” from first‑time buyers to lift activity, particularly in the same high‑priced provinces that TD has just downgraded.
TD also saw Quebec and the Prairies outperforming thanks to tighter supply and better affordability, even as Ontario and B.C. lagged.
Source CMP
By Liezel Once
