TD Economics has revised its predictions for home sales and prices in 2026, expecting a decline instead of growth due to lackluster performance in the previous two quarters. Sales are projected to drop by 1.8% year-over-year on average, with national home prices also anticipated to decrease by 0.3%. This contrasts sharply with earlier forecasts in December, which projected a 9.3% increase in home sales and a 4.1% rise in average home prices for the year.
Economist Rishi Sondhi noted that housing activity is likely to take most of the year to recover from first-quarter losses. Factors such as a subdued economy, increased uncertainty, and ongoing cost-of-living pressures are constraining sales. Severe weather in Central and Atlantic Canada impacted early-year activity, while British Columbia also experienced weakness despite milder conditions.
Ontario and B.C. received the most significant downgrades in sales and prices following substantial declines in the first quarter. Affordability challenges continue to deter potential buyers in these provinces, leading them to wait for the market to stabilize. TD’s previous projections of a 13% increase in Ontario home sales and a 15.1% rise in B.C. have been revised downwards, with Ontario now expected to see 3.2% fewer transactions and B.C. forecasted to dip by 0.2%.
Price expectations have also shifted, with Ontario expected to see a 4% decrease (compared to the prior forecast of a 0.6% gain) and B.C. anticipating a 1.2% decline (versus the earlier 3.6% rise). Sondhi highlighted that pent-up demand has been slower to materialize in these provinces, hinting that further price adjustments might be necessary to stimulate activity.
The report warned of lingering risks, such as potential tensions in the Middle East impacting oil-producing and importing regions, which could influence housing market dynamics. However, Sondhi mentioned that faster-than-expected demand recovery might occur under certain scenarios. External factors like upcoming CUSMA negotiations could also have significant implications for the broader economy and housing market.
Looking ahead, TD anticipates a rebound in Canadian home sales in 2027 driven by improved economic and job market conditions, which could result in an uptick in the national average price. The current forecast predicts a 9.6% year-over-year increase in home sales in 2027, accompanied by a 2.7% rise in average prices.