The Canadian Real Estate Association (CREA) has adjusted its housing market projection downwards due to an increase in fixed mortgage rates and lower-than-anticipated housing sales in the first quarter of 2026. Initially, CREA anticipated a surge in sales, particularly from first-time buyers, driven by pent-up demand. However, escalating inflation in late March, triggered by a surge in oil prices, raised the likelihood of a Bank of Canada rate hike. Consequently, bond yields rose, leading to a spike in fixed mortgage rates.
Shaun Cathcart, a senior economist at CREA, highlighted that adverse global events, such as the situation in the Middle East and the oil shock, prompted the revision in the forecast. In March, the non-seasonally adjusted national average home price stood at $673,084, representing a 0.8% decline compared to the same period last year. The MLS Home Price Index also decreased by 0.4% on a monthly basis, marking the 16th consecutive month of decline.
While some provinces experienced rising prices, B.C., Alberta, and Ontario witnessed year-over-year price decreases. The uncertainty surrounding global events, including the U.S. and Israel’s conflict with Iran, has left buyers hesitant. Cathcart noted that despite the anticipation of a price stabilization, the recent increase in mortgage rates might prolong the wait-and-see approach adopted by buyers.
The number of home sales across Canadian MLS Systems saw a marginal 0.1% decline in March compared to the previous month. However, the actual monthly activity was 2.3% lower than in March 2025. At the end of March, 167,524 properties were listed for sale on Canadian MLS Systems, representing a 1% increase from the previous year but remaining 10.6% below the long-term average for that period.
Despite the revised forecast, CREA projects a 1.5% annual increase in the national average home price to $688,955 in 2026. While minimal growth is expected in B.C., Alberta, and Ontario, other provinces are likely to see gains ranging from two to five percent. CREA also forecasts a one percent rise in overall sales for 2026, primarily driven by B.C. and Ontario.
Looking ahead to 2027, CREA anticipates a 0.9% increase in average home prices to $695,094, with national home sales projected to rise by 2.1%. The association mentioned that the current housing market forecasts could be revised upwards if the impact of the ongoing oil shock is short-lived.