CMHC forecast: Where Canada's housing market will struggle through 2026 and where it won't
Canada's housing market is no longer moving as one. According to the latest summer housing outlook from the Canada Mortgage and Housing Corporation (CMHC), regional economic conditions are creating two very different real estate stories.
While Prairie provinces are expected to maintain relatively healthy housing activity through the remainder of 2026, Canada's largest urban markets, including Toronto and Vancouver, are forecast to experience a much slower recovery. CMHC suggests that these differences are being driven more by regional economic conditions, migration patterns, and trade exposure than by local housing policies.
Although the agency continues to forecast Canada's economy to grow by approximately 0.7 percent in 2026, the outlook varies considerably depending on where you live.
Western Canada Continues to Lead
The strongest housing markets are expected to remain in the Prairie provinces and Quebec.
CMHC attributes this resilience to several factors, including stronger consumer spending, continued interprovincial migration, and economies that are less dependent on manufacturing sectors affected by ongoing trade disputes.
Alberta and Saskatchewan continue to attract Canadians relocating from other provinces, helping support demand for housing despite the significant slowdown in Canada's overall population growth. Resource-based industries have also benefited from higher commodity prices, providing additional support for local employment and housing activity.
As a result, home sales across much of Western Canada are expected to remain relatively stable through the end of the year.
Ontario and British Columbia Continue to Face Headwinds
The picture is quite different in Ontario and British Columbia.
Housing affordability had already become a significant challenge before Canada's rapid population growth began to slow. With immigration and population gains easing considerably, demand has softened further in many of the country's most expensive housing markets.
CMHC expects home sales in both the Greater Toronto Area and Metro Vancouver to remain below their long-term averages through at least 2028.
While lower mortgage rates may provide some relief, the agency believes any recovery in prices is likely to be gradual rather than dramatic. Instead of a sharp correction, CMHC anticipates a prolonged period of subdued activity as supply and demand slowly move back toward balance.
Trade Disputes Continue to Create Uncertainty
One of the largest risks identified in the forecast is the uncertainty surrounding international trade.
Ongoing trade tensions between Canada and the United States have increased concerns about business investment, hiring, and overall economic confidence. When businesses delay expansion plans or reduce hiring, housing demand often weakens as fewer households are willing or able to make major purchasing decisions.
CMHC notes that even if interest rates decline, improving affordability alone may not be enough to stimulate stronger housing activity if economic confidence remains subdued.
Higher Energy Prices Could Influence Interest Rates
Global geopolitical events are also creating additional uncertainty.
Higher oil prices resulting from international conflicts could place renewed pressure on inflation. If inflation remains elevated for longer than expected, the Bank of Canada may have less flexibility to reduce interest rates, keeping borrowing costs higher for an extended period.
That scenario would likely slow both home buying activity and new residential construction.
CMHC also expects rental markets to gradually become more balanced as new housing supply enters the market while population growth remains considerably lower than the levels experienced over the past several years.
Recovery Is Expected to Be Slow
Although CMHC expects housing activity to improve beyond 2026, it stops well short of predicting a rapid rebound.
Slower population growth, modest wage gains, and ongoing economic uncertainty are expected to limit both home price appreciation and sales growth across much of the country.
Rather than returning to the fast-paced housing conditions seen during the previous decade, Canada appears to be entering a period where regional economic performance will play a much larger role in determining local real estate markets.
Provinces that continue attracting workers and investment may outperform, while regions facing slower economic growth could experience a more gradual recovery.
The Bottom Line
CMHC's latest outlook suggests that Canada's housing market is entering a new phase where regional differences matter more than ever.
Western provinces continue to benefit from stronger migration patterns and resource-driven economies, while Ontario and British Columbia face slower demand due to affordability challenges and softer population growth.
Although conditions are expected to improve gradually over the coming years, CMHC does not anticipate a return to the rapid price growth and strong sales activity that characterized much of the previous decade. Instead, the market is likely to remain highly dependent on economic growth, employment trends, migration, and the direction of interest rates.
References
• Canada Mortgage and Housing Corporation (CMHC), Housing Market Outlook – Summer 2026 Edition
Disclaimer: The information in this article is provided for general educational purposes only and does not constitute financial, legal, or tax advice. Readers should consult qualified professionals before making decisions based on this content. View our full Disclaimers & Privacy Policy →
Canada's housing market is no longer moving as one. According to the latest summer housing outlook from the Canada Mortgage and Housing Corporation (CMHC), regional economic conditions are creating two very different real estate stories.
While Prairie provinces are expected to maintain relatively healthy housing activity through the remainder of 2026, Canada's largest urban markets, including Toronto and Vancouver, are forecast to experience a much slower recovery. CMHC suggests that these differences are being driven more by regional economic conditions, migration patterns, and trade exposure than by local housing policies.
Although the agency continues to forecast Canada's economy to grow by approximately 0.7 percent in 2026, the outlook varies considerably depending on where you live.
Western Canada Continues to Lead
The strongest housing markets are expected to remain in the Prairie provinces and Quebec.
CMHC attributes this resilience to several factors, including stronger consumer spending, continued interprovincial migration, and economies that are less dependent on manufacturing sectors affected by ongoing trade disputes.
Alberta and Saskatchewan continue to attract Canadians relocating from other provinces, helping support demand for housing despite the significant slowdown in Canada's overall population growth. Resource-based industries have also benefited from higher commodity prices, providing additional support for local employment and housing activity.
As a result, home sales across much of Western Canada are expected to remain relatively stable through the end of the year.
Ontario and British Columbia Continue to Face Headwinds
The picture is quite different in Ontario and British Columbia.
Housing affordability had already become a significant challenge before Canada's rapid population growth began to slow. With immigration and population gains easing considerably, demand has softened further in many of the country's most expensive housing markets.
CMHC expects home sales in both the Greater Toronto Area and Metro Vancouver to remain below their long-term averages through at least 2028.
While lower mortgage rates may provide some relief, the agency believes any recovery in prices is likely to be gradual rather than dramatic. Instead of a sharp correction, CMHC anticipates a prolonged period of subdued activity as supply and demand slowly move back toward balance.
Trade Disputes Continue to Create Uncertainty
One of the largest risks identified in the forecast is the uncertainty surrounding international trade.
Ongoing trade tensions between Canada and the United States have increased concerns about business investment, hiring, and overall economic confidence. When businesses delay expansion plans or reduce hiring, housing demand often weakens as fewer households are willing or able to make major purchasing decisions.
CMHC notes that even if interest rates decline, improving affordability alone may not be enough to stimulate stronger housing activity if economic confidence remains subdued.
Higher Energy Prices Could Influence Interest Rates
Global geopolitical events are also creating additional uncertainty.
Higher oil prices resulting from international conflicts could place renewed pressure on inflation. If inflation remains elevated for longer than expected, the Bank of Canada may have less flexibility to reduce interest rates, keeping borrowing costs higher for an extended period.
That scenario would likely slow both home buying activity and new residential construction.
CMHC also expects rental markets to gradually become more balanced as new housing supply enters the market while population growth remains considerably lower than the levels experienced over the past several years.
Recovery Is Expected to Be Slow
Although CMHC expects housing activity to improve beyond 2026, it stops well short of predicting a rapid rebound.
Slower population growth, modest wage gains, and ongoing economic uncertainty are expected to limit both home price appreciation and sales growth across much of the country.
Rather than returning to the fast-paced housing conditions seen during the previous decade, Canada appears to be entering a period where regional economic performance will play a much larger role in determining local real estate markets.
Provinces that continue attracting workers and investment may outperform, while regions facing slower economic growth could experience a more gradual recovery.
The Bottom Line
CMHC's latest outlook suggests that Canada's housing market is entering a new phase where regional differences matter more than ever.
Western provinces continue to benefit from stronger migration patterns and resource-driven economies, while Ontario and British Columbia face slower demand due to affordability challenges and softer population growth.
Although conditions are expected to improve gradually over the coming years, CMHC does not anticipate a return to the rapid price growth and strong sales activity that characterized much of the previous decade. Instead, the market is likely to remain highly dependent on economic growth, employment trends, migration, and the direction of interest rates.
References
• Canada Mortgage and Housing Corporation (CMHC), Housing Market Outlook – Summer 2026 Edition
Disclaimer: The information in this article is provided for general educational purposes only and does not constitute financial, legal, or tax advice. Readers should consult qualified professionals before making decisions based on this content. View our full Disclaimers & Privacy Policy →
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