The Housing Market Is Waking Up, But Don’t Expect a Boom
After several years of high borrowing costs, hesitant buyers and falling activity in some of Canada’s largest housing markets, there are finally signs that the market may be starting to turn a corner.
The change is not dramatic. There is no sudden rush of buyers or rapid surge in prices. Instead, the early stages of recovery are showing up in quieter ways: sales are gradually increasing, inventory is beginning to level out and prices are showing signs of stabilization.
According to the Canadian Real Estate Association, national home sales increased for a fourth consecutive month in July. The MLS Home Price Index also edged up 0.1% from June, its first monthly increase since November 2024.
That does not mean Canada has entered another housing boom. In fact, the more important story may be just how gradual the next phase of the market is expected to be.
Years of Delayed Decisions Could Start Coming Back to Market
One of the biggest questions heading into the remainder of 2026 is what happens to Canadians who have spent the last few years waiting.
Higher mortgage rates and affordability pressures caused many potential buyers to delay plans. Some stayed in rentals longer than expected. Existing homeowners postponed moving into larger homes, while others delayed downsizing.
Those housing needs did not necessarily disappear.
RBC Economics estimates that more than 400,000 household formations may have been suppressed since 2019, creating a potentially significant pool of future housing demand.
As affordability gradually improves in some markets and economic conditions stabilize, more of those buyers may begin reconsidering their plans.
This could be especially important because the next phase of the market may be driven less by dramatically falling interest rates and more by buyers simply becoming comfortable moving forward again.
2026 Is Still Expected to Be a Down Year
The recent improvement also needs to be kept in perspective.
Weak conditions earlier in the year mean RBC still expects Canadian home resales to decline 3.6% in 2026, while its benchmark home price measure is forecast to fall 2.3%.
The more noticeable recovery is expected in 2027. RBC currently projects sales to increase 6.7% next year, while benchmark home values are forecast to rise a modest 0.8%.
In other words, recovery does not necessarily mean rapidly rising prices.
It may simply mean a healthier market where buyers become more active, inventory gradually gets absorbed and prices stop declining.
Where You Live Will Matter More Than the National Numbers
Perhaps the biggest mistake Canadians can make right now is treating the housing market as one national market.
Ontario and British Columbia have experienced longer and deeper corrections, and rebuilding buyer confidence could take time. RBC expects activity in both provinces to improve in 2027, but the recovery is likely to be gradual.
Other parts of Canada have remained considerably stronger. Markets in Quebec, Saskatchewan, Manitoba and parts of Atlantic Canada have experienced different supply, demand and price conditions, while Alberta is expected to continue benefiting from comparatively stronger economic and demographic fundamentals.
The condo market presents another challenge.
Higher inventories in Toronto and Vancouver, combined with weaker investor demand, could keep pressure on condo prices even as other parts of the housing market begin improving. RBC believes weakness in that segment could extend into 2027.
That means headlines about a national recovery may tell you very little about what is happening in your neighbourhood or property type.
Buyers May Not Get Much More Help From Rates
For anyone waiting for significantly cheaper borrowing costs before making a move, there is another consideration.
RBC believes interest rates are likely at or near their low point for this cycle, meaning the next stage of the housing recovery may have to occur without substantial additional relief from borrowing costs.
That puts more emphasis on other factors, including income growth, employment, home prices and the amount buyers have been able to save while sitting on the sidelines.
It also changes the calculation for prospective buyers. Waiting can still make sense depending on your finances and local market, but waiting solely for dramatically lower rates may not produce the opportunity some buyers expect.
A Recovery Can Still Be a Good Market for Buyers
A slow recovery is not necessarily bad news.
In fact, a market where activity improves before prices accelerate can create an interesting window. Buyers may have more confidence that values are stabilizing while still benefiting from relatively healthy inventory and negotiating room in certain markets.
Sellers, meanwhile, may see more potential buyers returning after a long period of hesitation, but pricing appropriately will remain critical. A recovering market does not automatically mean every property will attract multiple offers or sell quickly.
For homeowners considering a move, the next year may therefore be less about trying to perfectly time the bottom and more about understanding the conditions in their specific market.
Canada’s housing market appears to be moving again. But if the current outlook holds, this recovery will likely be measured in steps rather than leaps.
And after several years of dramatic swings, a slower and more balanced housing market may be exactly what comes next.
Sources: RBC Economics, Mid-year outlook for Canada’s housing market: Between correction and recovery, September 1, 2026; Canadian Real Estate Association, Canadian Home Sales Climb Again in July, August 18, 2026.
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 →
After several years of high borrowing costs, hesitant buyers and falling activity in some of Canada’s largest housing markets, there are finally signs that the market may be starting to turn a corner.
The change is not dramatic. There is no sudden rush of buyers or rapid surge in prices. Instead, the early stages of recovery are showing up in quieter ways: sales are gradually increasing, inventory is beginning to level out and prices are showing signs of stabilization.
According to the Canadian Real Estate Association, national home sales increased for a fourth consecutive month in July. The MLS Home Price Index also edged up 0.1% from June, its first monthly increase since November 2024.
That does not mean Canada has entered another housing boom. In fact, the more important story may be just how gradual the next phase of the market is expected to be.
Years of Delayed Decisions Could Start Coming Back to Market
One of the biggest questions heading into the remainder of 2026 is what happens to Canadians who have spent the last few years waiting.
Higher mortgage rates and affordability pressures caused many potential buyers to delay plans. Some stayed in rentals longer than expected. Existing homeowners postponed moving into larger homes, while others delayed downsizing.
Those housing needs did not necessarily disappear.
RBC Economics estimates that more than 400,000 household formations may have been suppressed since 2019, creating a potentially significant pool of future housing demand.
As affordability gradually improves in some markets and economic conditions stabilize, more of those buyers may begin reconsidering their plans.
This could be especially important because the next phase of the market may be driven less by dramatically falling interest rates and more by buyers simply becoming comfortable moving forward again.
2026 Is Still Expected to Be a Down Year
The recent improvement also needs to be kept in perspective.
Weak conditions earlier in the year mean RBC still expects Canadian home resales to decline 3.6% in 2026, while its benchmark home price measure is forecast to fall 2.3%.
The more noticeable recovery is expected in 2027. RBC currently projects sales to increase 6.7% next year, while benchmark home values are forecast to rise a modest 0.8%.
In other words, recovery does not necessarily mean rapidly rising prices.
It may simply mean a healthier market where buyers become more active, inventory gradually gets absorbed and prices stop declining.
Where You Live Will Matter More Than the National Numbers
Perhaps the biggest mistake Canadians can make right now is treating the housing market as one national market.
Ontario and British Columbia have experienced longer and deeper corrections, and rebuilding buyer confidence could take time. RBC expects activity in both provinces to improve in 2027, but the recovery is likely to be gradual.
Other parts of Canada have remained considerably stronger. Markets in Quebec, Saskatchewan, Manitoba and parts of Atlantic Canada have experienced different supply, demand and price conditions, while Alberta is expected to continue benefiting from comparatively stronger economic and demographic fundamentals.
The condo market presents another challenge.
Higher inventories in Toronto and Vancouver, combined with weaker investor demand, could keep pressure on condo prices even as other parts of the housing market begin improving. RBC believes weakness in that segment could extend into 2027.
That means headlines about a national recovery may tell you very little about what is happening in your neighbourhood or property type.
Buyers May Not Get Much More Help From Rates
For anyone waiting for significantly cheaper borrowing costs before making a move, there is another consideration.
RBC believes interest rates are likely at or near their low point for this cycle, meaning the next stage of the housing recovery may have to occur without substantial additional relief from borrowing costs.
That puts more emphasis on other factors, including income growth, employment, home prices and the amount buyers have been able to save while sitting on the sidelines.
It also changes the calculation for prospective buyers. Waiting can still make sense depending on your finances and local market, but waiting solely for dramatically lower rates may not produce the opportunity some buyers expect.
A Recovery Can Still Be a Good Market for Buyers
A slow recovery is not necessarily bad news.
In fact, a market where activity improves before prices accelerate can create an interesting window. Buyers may have more confidence that values are stabilizing while still benefiting from relatively healthy inventory and negotiating room in certain markets.
Sellers, meanwhile, may see more potential buyers returning after a long period of hesitation, but pricing appropriately will remain critical. A recovering market does not automatically mean every property will attract multiple offers or sell quickly.
For homeowners considering a move, the next year may therefore be less about trying to perfectly time the bottom and more about understanding the conditions in their specific market.
Canada’s housing market appears to be moving again. But if the current outlook holds, this recovery will likely be measured in steps rather than leaps.
And after several years of dramatic swings, a slower and more balanced housing market may be exactly what comes next.
Sources: RBC Economics, Mid-year outlook for Canada’s housing market: Between correction and recovery, September 1, 2026; Canadian Real Estate Association, Canadian Home Sales Climb Again in July, August 18, 2026.
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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