TD Economics has revised its forecast for home sales and prices in 2026, anticipating a decline in both metrics this year following lackluster performance in the previous two quarters. The new projection suggests a 1.8% year-over-year drop in sales and a marginal 0.3% decrease in national home prices. This adjustment comes after initially predicting a 9.3% increase in home sales and a 4.1% rise in average prices by the end of 2026.
Economist Rishi Sondhi noted that housing activity is expected to take most of the year to recover from first-quarter setbacks, attributing the sales slump to economic constraints, heightened uncertainty, and ongoing cost-of-living pressures. The report highlighted significant declines in Ontario and B.C., where affordability challenges continue to deter potential buyers, leading to subdued market conditions and a wait-and-see approach for many.
The revised projections indicate a downward trend for both sales and prices in Ontario and B.C., deviating from the previous optimistic outlook. TD Economics now anticipates a 3.2% decrease in home sales in Ontario and a slight 0.2% dip in B.C., compared to the earlier forecasts of double-digit growth. Price forecasts have also been adjusted, with Ontario expected to experience a 4% decline and B.C. a 1.2% drop, signaling the need for further price adjustments to stimulate demand in these regions.
Sondhi cautioned about lingering risks, such as potential geopolitical tensions in the Middle East, which could impact oil-producing and importing regions differently. Moreover, upcoming CUSMA negotiations are expected to have implications for the broader economy and housing market dynamics. Looking ahead, the report projects a rebound in Canadian home sales in 2027, driven by improved economic conditions and job market stability, which could lead to a 9.6% increase in sales and a 2.7% rise in average prices next year.
