Economic uncertainty to continue weighing on housing market: CMHC

Ottawa, July 22, 2026

Housing market activity is expected to remain subdued through 2026 as economic uncertainty, slower population growth, high borrowing costs and modest income growth limit housing demand across Canada. This according to Canada Mortgage and Housing Corporation's (CMHC) 2026 Housing Market Outlook Mid-Year Update. Along with the national outlook, CMHC is releasing forecast data for 18 markets across the country.

Canada's economy is expected to grow slowly in 2026, supported by consumer spending, government investment, and exports. However, uncertainty remains elevated as geopolitical tensions, particularly the US-Iran conflict, are expected to temporarily raise inflation, while Canada – U.S. trade uncertainty continues to affect business investment and hiring decisions. As housing demand remains subdued, home prices are expected to decline in 2026 before returning to modest growth in 2027 and 2028.

Home sales are expected to recover gradually through 2028 but remain below levels seen over the last decade, with ownership market conditions differing across regions in Canada. Prairie markets are expected to maintain high sales levels and lead price growth, while Quebec should see modest gains due to more balanced market conditions. Ontario and British Columbia are expected to face continued affordability challenges and weaker housing market activity.

Housing starts are projected to continue falling across the forecast period as builders respond to weak demand, elevated inventories and high construction costs. Low levels of construction relative to historical averages are expected in Ontario and British Columbia, particularly in condominium markets, while activity in the Prairies and Quebec is projected to moderate from recent highs.

Rental construction is expected to ease gradually from 2025 peak levels. Maintaining a sustainable level of new rental supply will be important to meet future housing needs, particularly as economic conditions improve towards the end of the forecast horizon and more new renter households begin to enter the market.

Rental market conditions are expected to continue easing as new supply comes to market, particularly in larger centres. Rising vacancy rates in markets such as Toronto, Vancouver and Montréal are expected to slow average rent growth, particularly for asking rents. Prairie markets are likely to see modest rent increases, supported by relatively stronger demand. Across Canada, affordability challenges will persist as rents remain high compared to incomes.

Quote:

“Price reductions have not yet been enough to bring demand back into the market as economic uncertainty, income growth and borrowing conditions all have played a role in sidelining buyers. We expect conditions to improve over the medium-term, however, housing construction should remain suppressed as the industry factors in today’s elevated inventories and weaker demand.”
— Kevin Hughes, Deputy Chief Economist, CMHC

Read the full report, including forecasting data for 18 markets across Canada, on CMHC’s Housing Observer.

Canada Mortgage and Housing Corporation (CMHC) is a federal Crown corporation and the foundation of Canada’s housing system. For over 80 years, CMHC has supported the functioning of housing markets across the country through housing finance solutions — including mortgage loan insurance and securitization — while providing trusted, unbiased data, research and market intelligence to inform policy and decision making. Through its national presence, deep expertise in housing economics and finance, and a system-wide perspective, CMHC helps foster a more stable, well-functioning housing market that supports households, communities and the broader economy.