The Canadian Real Estate Association expects national home sales to grow 5.1% in 2026, marking a rebound from last year’s tariff-induced slowdown in the market.
The association forecasts 494,512 residential properties will trade hands this year. The outlook released Thursday represents a downgrade from CREA’s prediction last fall of a 7.7% national increase in home sales for 2026.
It also expects the national average home price to rise 2.8% on an annual basis to $698,881, down from its earlier forecast of a 3.2% increase.
National home sales are forecast to climb a further 3.5% in 2027, with average home prices rising 2.3% to $714,991.
The association said pent-up demand, particularly from first-time buyers, is the major factor underpinning its forecast for higher activity compared with 2025. It said many of those potential buyers have been shut out of the market over the past four years amid affordability challenges and previously high interest rates.
“While interest rates have not fallen as far as many may have hoped for, they have likely fallen far enough to restore the attainability of home ownership for many, despite affordability that remains more challenging than it was prior to 2020,” it said in a press release.
The Bank of Canada held its key rate at 2.25% last month, and economists expect it to remain unchanged for much of this year. Bank of Canada governor Tiff Macklem said the rate is at the right level to balance inflation and economic growth.
That would halt a downward push that started in June 2024 to bring the key rate down from 5%, including one percentage point worth of cuts last year. The central bank’s next decision is expected to be announced Jan. 28.
Improved affordability and a lower inflation rate should spur more activity across the country, said Cameron Forbes, general manager at Re/Max Realtron Realty Inc.
“I do see first-time buyers coming back in,” he said, adding that employment has held steady on a national basis.
“We did see more activity in the latter part of 2025 for first-time buyers … and so they’ve got good jobs. The confidence I think will come once they finally realize that with current rates and incomes, they can afford now to purchase and it’s a good time to purchase.”
The anticipated bounce back in activity this year is expected to be driven largely by B.C. and Ontario, CREA said, after big markets such as Vancouver and Toronto were hit hard by trade-related economic uncertainty in 2025.
Activity in B.C. and Ontario is forecast to rise more than 8% in 2026. Most other provinces are expected to see gains of less than half of that, with sales already running at higher levels and supply far more constrained.
Sales fell nearly 2% in 2025
In its report for December, also released Thursday, CREA said the number of residential properties that changed hands across Canada was 4.5% lower than the same month a year earlier. Home sales also declined 2.7% on a seasonally adjusted basis from November.
Overall, there were 470,314 transactions in 2025, a decrease of 1.9% from 2024, which the association attributed in part to a “tariff-induced flight of buyers back to the sidelines” in the first quarter of the year.
However, the market underwent a rally beginning in April that saw sales climb 12% by August. While activity slowed “into more of a holding pattern” to finish the year, CREA said it expects the mid-year upward trend to repeat itself in 2026.
“There doesn’t appear to have been much rhyme or reason to the month-over-month decline in home sales in December, which was simply the result of coincident but seemingly unrelated slowdowns in Vancouver, Calgary, Edmonton, and Montreal,” said CREA senior economist Shaun Cathcart, in a press release.
“For that reason, it would be prudent for market observers to resist the temptation to trace a line from the end of 2025 into 2026. Rather, we continue to expect sales to move higher again as we get closer to the spring, rejoining the upward trend that was observed throughout the spring, summer, and early fall of last year.”
The national average sale price of a home in December was $673,335, which was just 0.1% lower than December 2024.
CREA’s own home price index, which aims to represent the sale of typical homes, edged 0.3% lower between November and December 2025, but was down 4% on a year-over-year basis.
“The good news is prices have adjusted a fair amount off of the 2022 heights and we’re looking forward to a bit of a foundation forming in 2026 for some growth,” said Forbes.
The association said new listings were down 2% month over month, marking the fourth straight monthly drop.
There were 133,495 properties listed for sale across Canada at the end of December, up 7.4% from a year earlier but 9.9% below the long-term average for that time of the year.