TD revises 2026 housing market forecast, expects sales and prices to decline this year
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TD Economics has sharply lowered its 2026 forecast for home sales and prices, saying it no longer expects them to grow this year after a weak performance over the past two quarters.
It now expects sales to decline an average of 1.8 percent year-over-year and home prices to decline 0.3 percent nationally.
As of December, TD was projecting a 9.3 percent year-over-year increase in home sales for 2026, as well as a 4.1 percent increase in median home prices.
Economist Rishi Sondhi said housing activity will take most of the year to recover from the first quarter loss as sales are constrained by the slowing economy, rising uncertainty and ongoing cost-of-living pressures.
“While severe weather in central and Atlantic Canada weighed on activity early in the year, weakness was also evident in BC, where conditions were more temperate,” they said in a report.
The report singled out Ontario and BC as having the sharpest declines in sales and prices after a “significant” decline in the first quarter, adding that potential buyers in those provinces still face significant affordability challenges and are likely waiting for the market to bottom out.
Canada’s housing market remained sluggish in February with the average home price falling 4.8 per cent from a year earlier and experts don’t expect much change even with a mild cold snap in the spring.
In its previous projections, TD expected home sales in Ontario and BC to grow 13 per cent and 15.1 per cent respectively. It now expects there to be 3.2 per cent fewer transactions in Ontario, while activity in BC is projected to be down 0.2 per cent.
Prices in Ontario are expected to decline four per cent, compared with a 0.6 per cent increase projected in December, and in BC they will decline 1.2 per cent, compared with a previously expected 3.6 per cent rise.
Sondhi said pent-up demand in those provinces “has still not emerged as quickly as previously expected”, suggesting further price declines may be needed to boost activity.
He cautioned that risks still remain, including a broader or more prolonged escalation of tensions in the Middle East, which “could support activity in oil-producing regions but weigh more heavily on oil importers.” That could potentially increase pent-up demand in Ontario and B.C. “more quickly or more strongly than expected,” Sondhi said.
He said the upcoming CUSMA negotiations are also important for the broader economy and the housing market.
The report projects a boom in Canadian home sales in 2027 due to improving economic and job market conditions, which could also push up the national average price.
TD currently expects home sales to increase 9.6 percent year-over-year in 2027, with median prices rising 2.7 percent.
