CREA Cuts Canadian Housing Market Forecast Amid Rising Rates and Oil Shock
Event summary
- CREA downgraded its 2026 and 2027 forecasts for Canadian home sales and prices due to rising mortgage rates and economic uncertainty.
- 2026 home sales expected to rise just 1% to 474,972 units, with national average price increasing 1.5% to $688,955.
- 2027 sales forecast at 485,071 units (up 2.1%), with average price edging up 0.9% to $695,094.
- Oil price-driven inflation and higher bond yields have increased the likelihood of a Bank of Canada rate hike later in 2026.
- Provincial variations expected, with British Columbia and Ontario driving modest gains, while other regions see slower growth.
The big picture
CREA's revised forecast reflects broader economic headwinds, including rising interest rates and inflationary pressures from the oil sector. The downgrade underscores the sensitivity of Canada's housing market to monetary policy shifts, particularly as first-time buyers remain sidelined. The forecast suggests a prolonged period of stagnation in home prices, with regional disparities driven by population growth and economic conditions.
What we're watching
- Rate Hike Impact
- How higher mortgage rates will affect buyer activity and pricing stability in key markets like British Columbia and Ontario.
- Economic Recovery
- Whether Canada's tepid economic start to 2026 will persist, further dampening housing market activity.
- Oil Shock Duration
- The pace at which oil-driven inflation subsides and whether it triggers a sustained Bank of Canada rate hike.