Recent housing market news shows worrying trends as we enter 2026. The national average home price in Canada has dropped to $673,335. This represents a 1.3% decline from last month and a 0.5% drop from last year. The standard home price has fallen for seven straight months to $660,300. This marks a 0.7% decrease from November 2025 and a 4.0% drop from last year.

The Canadian housing market faces tough challenges right now. Home sales dropped by 1.9% in December compared to the previous year. Major urban areas paint an even bleaker picture. Toronto and Vancouver markets have hit their lowest sales numbers in 20 years. Toronto saw just 62,433 home sales last year - the lowest since 2000. The national picture shows 39,134 homes sold in December 2025 on a seasonally adjusted basis. These numbers fell 3.1% from November and sit 7.4% below last year's levels.

Some hope for recovery exists despite these concerning numbers. The Canadian Real Estate Association believes southern Ontario and British Columbia will lead the sales recovery. These regions struggled a lot throughout 2025. This piece will get into what's driving these market changes, how different areas are performing, and what experts think the housing market will look like through 2026.

CREA Reports National Sales Decline in December 2025

Canadian Real Estate Association (CREA) data shows the national housing market cooled down as 2025 ended. The December numbers reflect ongoing market adjustments under economic pressure.

Home sales fall 1.9% year-over-year

Canada's housing market ended 2025 quieter than expected. Home sales on Canadian MLS® Systems dropped 2.7% compared to the previous month ^[1]. This slowdown led to yearly sales numbers falling behind last year's results.

The year's total transactions reached 470,314 units in 2025, showing a 1.9% drop from 2024 ^[1]. December's actual monthly activity fell even further, dropping 4.5% below December 2024 levels ^[1].

CREA reports show 39,134 homes sold in December on a seasonally adjusted basis. This represents a sharper 3.1% drop from November and sits 7.4% below last year ^[2]. The decline happened in part because of the U.S. tariffs' economic impact, which "pushed buyers to the sidelines" early in the year ^[3].

The slowdown hit major urban areas hard:

• Toronto saw just 62,433 home sales last year, the lowest since 2000

• Vancouver recorded 23,800 home sales, lower than during the 2008 financial crisis

• Hamilton's home sales fell 12% year-over-year, reaching their slowest pace since 2010 ^[4]

New listings also fell 2% from the previous month, making it the fourth straight monthly decrease ^[3]. The sales-to-new listings ratio eased to 52.3% from November's 52.7%, staying near the long-term average ^[3].

Benchmark prices drop for seventh straight month

The MLS® Home Price Index (HPI) kept falling, with a 0.3% monthly decrease and a 4% yearly decline ^[1]. These numbers confirm prices continued to normalize through 2025's end.

National benchmark home prices showed a bigger monthly drop of 0.7%, reaching $920,035.74 in December ^[2]. This seventh straight month of price decreases highlights the market's ongoing adjustment period.

Price corrections continue due to affordability challenges and economic uncertainty. Ontario felt the impact most strongly, with average home prices dropping more than any other region last year ^[5].

Average home price dips to $673,335

CREA's numbers show the non-seasonally adjusted national average home price hit $938,198.19 in December 2025, barely changing (-0.1%) from December 2024 ^[6]. Other sources paint a different picture.

Trading Economics reports Average House Prices in Canada fell to $673,400 in December from November's $675,400 ^[2]. This shows an ongoing adjustment from the peak of $827,300 in February 2022 ^[2].

Different methods and data sources explain the price reporting gap, but all point to price moderation in most markets. The national average sale price stayed almost flat year-over-year at -0.1%, though regional differences tell another story ^[5].

Ontario emerged as Canada's weakest housing market, with the largest average price drops nationwide ^[5]. This continues Ontario's underperformance compared to other regions since 2023 ^[5]. Other markets showed varying levels of stability, affecting the national average.

These December numbers suggest a challenging start to 2026, as supply-demand balances shift and regional differences grow sharper across Canada's housing markets.

Ontario and BC Lead Price Declines While Smaller Markets Surge

The gap between Canada's housing markets has grown wider than ever as 2026 begins. Major urban centers struggle while smaller markets thrive, creating a stark contrast across the country.

Toronto and Vancouver hit multi-year lows

Canada's largest cities face their toughest real estate challenges yet. Toronto's market hit rock bottom with just 62,433 home sales in 2025 - the lowest number since 2000 ^[7]. Vancouver's situation looks even worse with only 23,800 transactions, falling below the 2008 financial crisis levels ^[7].

These major markets have taken big hits on prices. Home prices in the Greater Toronto Area dropped 5.7% from last year to $1,510,820.47 in late 2025 ^[8]. Toronto's condo market has lost almost all its pandemic gains after more than two years of falling prices ^[9].

British Columbia's market moved in a similar direction. Average home prices fell about 3% in 2025 ^[10]. Vancouver took an even bigger hit with a 10% price drop as too many condos sat empty ^[10]. The standard price for single-family homes in Greater Vancouver fell 5.0% to $2,686,398.47 compared to last year ^[11].

Quebec City and Regina see double-digit price growth

Some smaller markets are thriving despite the national slowdown. Quebec City stands out as the star performer. Its standard price jumped 17.5% to reach a new record of $706,851.63 ^[11]. The city ranks among North America's most affordable housing markets ^[7].

Saskatchewan's market showed remarkable strength with average home prices climbing 9% in 2025 ^[9]. Regina's prices rose by 7% compared to last year ^[12]. Some data shows an even stronger 18% jump in December 2025 ^[2]. Winnipeg also did well with a 10% price increase over the year ^[12].

These prairie markets benefit from steady economic conditions, strong job opportunities, and homes people can afford ^[12]. First-time buyers in Regina still look for homes priced between $418,008 and $557,344 ^[6].

Atlantic provinces remain resilient

The Atlantic region stays strong while other parts of Canada face challenges. Newfoundland and Labrador saw prices rise almost 10% for the second year running ^[9]. December 2025 numbers show a 7.5% increase from the previous year ^[2].

Nova Scotia keeps moving forward steadily. Halifax home prices went up 4% from last year ^[4]. The province's standard price dipped slightly month-to-month but still ended up 1.9% higher for the year ^[2].

New Brunswick and Prince Edward Island tell a similar story. New Brunswick's average home price climbed 2.4% in December 2025 compared to the previous year ^[2]. The Atlantic provinces benefit from both retirees moving from Ontario and newcomers from other countries ^[4].

This split between regions shows how balanced markets in the Prairies, Quebec, and Atlantic Canada support modest price increases. Meanwhile, Ontario and B.C. continue to deal with market challenges ^[13].

Experts Warn of Lingering Economic Risks in 2026

Canadian housing faces big risks through 2026. The market correction might last longer due to economic challenges that go way beyond current conditions.

Trade war raises construction costs

A trade dispute between Canada and the United States keeps pushing building material prices higher. Construction materials have jumped 34% since December 2020, which is a big deal as it means that general inflation rates are nowhere near this level ^[14]. Each new home now costs builders an extra CAD 15,187.63 due to recent tariff actions ^[14].

Canadian softwood lumber supplies nearly one-quarter of U.S. needs, and the situation looks tough. The Commerce Department charges 14.5% tariffs on Canadian lumber right now. These rates will more than double to 34.5% this year ^[14]. Buyers end up paying these extra costs through higher home prices.

These tariffs could raise Canadian residential project costs by 1% to 4%, based on where supplies come from ^[15]. Experts predict these trade issues might shrink Canadian GDP by 1.5% through 2026 compared to what it would be without tariffs ^[16].

Interest rate stability limits affordability recovery

Banks have changed their minds about rate cuts. Most now expect the overnight rate to stay at 2.25% through most of 2026. Rates might move slightly only near year-end ^[5].

CIBC's deputy chief economist Benjamin Tal sees an even longer stable period: "In all likelihood, the Bank of Canada will keep rates at the current level until 2027" ^[16]. This means housing affordability stays challenging even as prices cool in some areas.

The rate situation seems stuck at one level. The Bank of Canada made this clear on October 29, 2025, saying rates were "likely about as good as they were going to get." This news might attract people who waited to get fixed-rate mortgages ^[13].

Mortgage renewals may trigger forced listings

Market stability faces its biggest risk from a huge wave of mortgage renewals in 2026. More than a million Canadian mortgages need renewal that year ^[1], after 750,000 renewals in late 2025. Many of these loans started in early 2021 with rates under 2% ^[1].

The Bank of Canada thinks monthly payments will rise 15% to 20% on average for people renewing 5-year fixed-rate mortgages in 2026 ^[1]. Some face even tougher changes - about 10% of renewal holders could see payments jump by more than 40% ^[1].

Market analysts predict that "Many who foresee financial hardship at renewal will choose to sell in the Spring of 2026" ^[1]. This early selling could flood the market with listings and give buyers more power.

Quotes from CREA and RBC economists

The Canadian Real Estate Association stays cautiously positive about 2026. They expect residential property sales through MLS® Systems to grow by 5.1% ^[13]. CREA thinks the national average home price will climb 2.8% yearly to CAD 973,792.97 ^[13].

RBC economist Robert Hogue says: "With the central bank signaling it's done this cycle, it could be the hint some buyers were waiting for to make a move" ^[5]. He believes "past rate reductions and price drops in certain markets to draw more buyers from the sidelines in the year ahead, unlocking some pent-up demand" ^[5].

CMHC's deputy chief economist Aled ab Iorwerth takes a more careful stance: "My instinct for 2026 is that everybody's going to remain very cautious... when you see a lot of uncertainty, your first best option is to do nothing" ^[16].

Immigration and Regional Affordability Offer Market Support

Demographics currently help balance the downward pressures in the Canadian housing market and provide crucial support during broader challenges.

Established immigrants drive demand in urban centers

Recent immigrants are reaching key milestones for homeownership. These newcomers have achieved the two-year Canadian residency requirement and job stability they need for better mortgage financing, which lets them switch from renting to owning ^[2]. Major urban markets like Toronto, Vancouver, Montreal, and Calgary see this structural demand, which creates a natural price floor ^[2]. The numbers tell an interesting story - immigrants represent 23% of Canada's population but make up 42% of Toronto's metropolitan area ^[17]. Recent immigrants drove over 70% of population growth in private households between 2016-2021 ^[17].

Affordable provinces attract first-time buyers

Buyers are heading to more affordable regions. New Brunswick stands out with some of Canada's lowest home prices at CAD 557,344 ^[18]. Newfoundland offers even better deals with average prices around CAD 405,886 ^[18]. Saskatchewan's homes average about CAD 452,006 ^[18], which draws budget-conscious buyers. Regina's first-time buyers typically look at properties between CAD 418,008 and CAD 557,344 ^[18]. Remote work options let people choose these affordable markets ^[3], which keeps these regions active.

SNLR indicates seller's markets in most regions

Sales-to-new-listings ratio (SNLR) shows how markets perform across Canada. Most provinces maintain seller's markets - Alberta (72%), Saskatchewan (64%), Manitoba (61%), Nova Scotia (63%), and Newfoundland (69%) ^[19]. Winnipeg leads the pack as Canada's strongest seller's market with a 69% SNLR ^[20]. Ontario has shifted to a buyer's market at 34% SNLR ^[19], while Quebec (51%) and PEI (58%) stay balanced ^[19]. Markets with SNLR above 60% typically favor sellers as demand outpaces supply ^[21].

Forecasts Suggest Modest Recovery Amid Uncertainty

Canadian housing experts predict a slow recovery in the real estate sector by 2026, though economic uncertainty makes the future hard to predict.

CREA projects 5.1% sales increase in 2026

The Canadian Real Estate Association expects 494,512 residential properties to sell through MLS® Systems in 2026. This represents a 5.1% increase from 2025 ^[13]. The growth seems modest when compared to past recovery cycles. BC and Ontario will likely lead this recovery with sales jumping more than 8% in both provinces ^[13]. Other provinces should see gains that are less than half that rate since their markets already show higher activity levels ^[13]. Sales should keep improving into 2027, reaching 511,966 units - a 3.5% increase year-over-year ^[8].

Muted price growth expected nationally

Most forecasts show limited price increases. CREA expects the national average home price to climb 2.8% to CAD 973,792.97 in 2026 ^[13]. Royal LePage takes a more cautious view and predicts just 1% growth to about CAD 1,146,740 ^[10]. This would be the sixth straight year with the national average staying close to CAD 975,000 ^[22]. Previously hot markets should see price gains slow significantly from 6%-8% in 2025 to 3%-6% in 2026 ^[13].

Supply constraints continue to limit options

Building challenges will likely persist through 2026. Builder confidence remains low, as shown by the Canadian Home Builders' Housing Market Index near historic bottom levels ^[23]. Toronto's housing starts have hit a 30-year low ^[23]. New tariffs on building materials add CAD 41,800-69,668 to home costs ^[2], which forces developers to put projects on hold. First-time buyers might make inventory even tighter since they take listings off the market without adding new supply ^[13]. This could speed up market tightening in some areas.

Conclusion

The Canadian housing market faces a turning point in 2026. Seven straight months of price drops and record-low sales in major cities show the market's struggles. All the same, this downturn points to a market that's changing rather than failing.

Different regions tell different stories. Toronto and Vancouver deal with their lowest sales in years. Meanwhile, smaller cities like Quebec City and Regina show amazing strength with prices jumping by double digits. Buyers now put affordability ahead of big-city living.

The economic picture looks tough for 2026. An ongoing trade fight with the U.S. pushes building costs up while interest rates stay flat. The biggest problem might be the wave of mortgage renewals this year. Many homeowners could be forced to sell, which might flood some markets with houses.

The market has some strong support systems in place. Long-time immigrants ready to buy homes create steady demand in cities. This helps set minimum price levels. On top of that, most areas still show healthy sales-to-new-listings ratios. Seller's markets thrive outside Ontario.

CREA expects sales to grow by 5.1%, hinting at a modest bounce back. Price growth should stay around 2.8% across Canada. Limited supply will make things harder for first-time buyers.

The 2026 market looks set for slow recovery instead of big swings either way. The days of rapid growth in any discipline seem gone for now. Many regions still have solid real estate basics, showing this is more about development than crisis. Without doubt, people who understand these regional differences will guide through this changing market best.

References

[1] - https://www.mortgagesandbox.com/news/housing-market-alert-the-2026-mortgage-renewal-wave-could-flood-the-market-with-listings
[2] - https://wowa.ca/reports/canada-housing-market
[3] - https://www.miraclemovers.com/the-best-canadian-provinces-for-affordable-homeownership/
[4] - https://wahi.com/ca/en/learning-center/real-estate-101/buy/rps-wahi-house-price-index-atlantic-canada-2025/
[5] - https://www.canadianmortgagetrends.com/2026/01/housing-and-interest-rate-forecasts-for-2026/
[6] - https://blog.remax.ca/regina-housing-market-outlook/
[7] - https://www.cbc.ca/news/business/canada-housing-market-annual-sales-9.7045276
[8] - https://dailyhive.com/vancouver/canada-home-sales-forecast-crea-2026-2027
[9] - https://financialpost.com/news/three-provinces-bucking-canada-housing-downturn
[10] - https://www.ctvnews.ca/business/article/tariffs-immigration-shifts-condo-softness-shape-canadas-housing-outlook-for-2026-royal-lepage-ceo/
[11] - https://wolfstreet.com/2026/01/15/the-most-splendid-housing-bubbles-in-canada-dec-2025-single-family-condo-prices-hit-multi-year-lows-in-toronto-spike-in-montreal-quebec/
[12] - https://www.sasktoday.ca/regina-today/regina-news/regina-among-canadas-strongest-housing-markets-new-data-shows-11631040
[13] - https://www.crea.ca/media-hub/news/crea-downgrades-resale-housing-market-forecast-amid-tariff-uncertainty-and-economic-uncertainty/
[14] - https://www.nahb.org/advocacy/top-priorities/building-materials-trade-policy/how-tariffs-impact-home-building
[15] - https://gowlingwlg.com/en-ca/insights-resources/articles/2025/tariffs-and-the-cost-of-building
[16] - https://www.kelownarealestate.com/blog-posts/your-mortgage-is-renewing-in-2026-heres-what-actually-matters
[17] - https://macdonaldlaurier.ca/the-housing-burden-of-uncheck-immigration-peter-copeland-in-commonplace/
[18] - https://www.justinhavre.com/blog/cheapest-places-to-buy-home-in-canada.html
[19] - https://equipels.com/en/canadian-real-estate-market-overview-by-province/
[20] - https://askross.ca/canada-housing-market-2025-city-by-city-summer-update/
[21] - https://pegasuslending.com/blog/sales-to-new-listings-ratio-canada-mortgage-rates/
[22] - https://www.crea.ca/media-hub/news/crea-updates-resale-housing-market-forecasts-for-2025-2026/
[23] - https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-supply-report