Canada's Housing Market at a Crossroads Ahead of 2026 Forecast

OTTAWA, ON – January 13, 2026 – The Canadian real estate landscape, marked by years of turbulence and economic uncertainty, is holding its breath as the Canadian Real Estate Association (CREA) prepares to unveil its highly anticipated 2026 housing market forecast this Thursday. The announcement, set to take place on Parliament Hill, promises to provide a crucial national outlook for a market grappling with the competing forces of high borrowing costs, persistent supply shortages, and immense demographic pressures.

For prospective buyers, sellers, and policymakers alike, the forecast from one of the nation's largest industry associations will serve as a key barometer for the year ahead. CREA has indicated its analysis will delve into core issues of affordability, the impact of shifting interest rates, and the critical need for increased housing supply. The press conference will feature insights from CREA's leadership, including CEO Janice Myers, Chair Valérie Paquin, and the association's Director and Senior Economist, Shaun Cathcart. Their findings and recommendations are expected to heavily influence market sentiment and could shape government strategy in addressing Canada's long-standing housing challenges.

A History of Volatility and Shifting Predictions

Contextualizing the upcoming forecast requires a look at the recent past, which has been characterized by significant unpredictability. CREA's own forecasting history over the last few years illustrates the immense difficulty of projecting market trends amid a rapidly changing economic environment.

Throughout 2023 and 2024, the association frequently revised its predictions, often scaling back initial optimism. For instance, an early 2023 forecast for 2024 projected a robust 10.2% rise in sales. By October 2024, that projection had been downgraded significantly to a more modest 5.2% increase, as anticipated interest rate cuts from the Bank of Canada failed to spur the expected market rebound. Similarly, price growth expectations were trimmed from a 3.5% gain to just 0.9% for 2024.

The pattern continued into 2025. What was initially expected to be a recovery year was hampered by what CREA described in a mid-year update as "tariff chaos and uncertainty," which disproportionately affected major markets in British Columbia, Alberta, and Ontario. This led to a forecast for a slight annual price decrease of 1.7% for 2025, a stark reversal from earlier, more positive outlooks. The association's senior economics team has previously noted that the only comparable period of forecasting difficulty was during the unprecedented COVID-19 lockdowns, highlighting the extraordinary level of uncertainty that has become the new normal. This history of necessary adjustments underscores the high stakes for the 2026 forecast and why the industry is watching so closely for signs of a stable recovery.

The Economic Tug-of-War: Interest Rates vs. Pent-Up Demand

At the heart of the 2026 outlook is a fundamental economic tug-of-war. On one side are the lower interest rates that have slowly begun to materialize. The Bank of Canada initiated a cycle of rate cuts in June 2024, and by late 2025, financial markets were anticipating the policy rate to settle around 2.5%. These lower borrowing costs are the primary catalyst expected to draw sidelined buyers back into the market.

Supporting this potential resurgence is significant pent-up demand. Many would-be buyers have delayed purchasing decisions over the last two years, waiting for affordability to improve. Economists at one of Canada's major banks noted in late 2025 that improving demand should support price growth, as underlying supply-and-demand conditions remain "relatively tight." They anticipated a gradual but steady increase in sales activity, fueled by this built-up demand.

On the other side of the rope, however, is the immense pressure from population growth. Canada's ambitious immigration targets, which saw nearly 500,000 newcomers in 2024 and a target of 395,000 for 2025, have added hundreds of thousands of new households in need of shelter. This demographic boom creates a powerful and consistent source of housing demand that has, according to many analysts, prevented a more severe price correction despite the high interest rate environment of recent years.

The Unresolved Crisis of Housing Supply

While demand-side factors like interest rates and population growth dominate headlines, CREA's forecast is expected to once again spotlight the critical, unresolved issue of housing supply. For years, the pace of new home construction has failed to keep up with population growth, creating a structural deficit that underpins the nation's affordability crisis. This chronic shortage means that even a modest increase in demand, spurred by lower rates, could quickly translate into renewed price pressures, eroding any affordability gains.

The upcoming forecast will likely include pointed recommendations for policymakers at the federal, provincial, and municipal levels. The conversation is shifting from simply managing demand to aggressively tackling supply-side constraints, such as streamlining zoning regulations, incentivizing the construction of "missing middle" housing, and investing in infrastructure to support new developments.

This supply-demand imbalance has a profound human cost. It stretches household budgets, pushes homeownership out of reach for a generation of young Canadians, and forces families to move further from urban centres in search of affordable options. The social and community implications of this trend—from longer commute times to increased pressure on local services—are becoming a central part of the national housing conversation, a dimension that CREA's analysis is expected to address as it advocates for a "healthier housing ecosystem."

Diverging Views and the Path Forward

While many signs point toward a market entering a recovery phase, a consensus remains elusive. Some independent analyses have painted a much starker picture. One international economics firm, for example, made headlines with predictions of a potential 24% price drop, a forecast that has so far proven far more pessimistic than the reality of the market's 15% peak-to-trough decline in 2022-2023, from which many regions have already begun to recover.

This divergence in expert opinion highlights the fragility of the current market. The "tariff chaos" of 2025 serves as a potent reminder that unforeseen global or domestic events can quickly alter the trajectory of the market. As a result, CREA's latest quarterly forecast in October 2025 projected that national home sales would rebound by 7.7% in 2026 to just over 509,000 units, with prices rising by 3.2% to an average of nearly $699,000. While this would mark the highest sales level since 2021, it would still remain below the ten-year average, suggesting a recovery, but not a return to the frenzied pace of the pandemic era.

All eyes will now turn to Thursday's press conference to see if that cautious optimism holds. The figures and analysis presented by CREA's leadership will provide the first comprehensive roadmap for the year, signaling whether Canadians can look forward to a period of stabilization and recovery or another year of navigating an uncertain and challenging housing market.