Canada Housing Market Forecast for 2025 and 2026 by CREA

If you're like me, you're constantly wondering what's next for the Canadian housing market. Will it finally cool down? Will prices keep skyrocketing? Well, the Canadian Real Estate Association (CREA) has offered its updated predictions, and here's the gist: expect a rebound in sales and prices in 2025, with continued growth into 2026, but the picture looks quite different across the country.

So, to put it simply, the Canada Housing Market Forecast for 2025 and 2026 suggests a continuing upward trend, fueled by pent-up demand and lower borrowing costs, but with some regional variations.

Canada Housing Market Forecast for 2025 and 2026

A Glimmer of Hope or More of the Same?

Let's be honest, the past few years have been a wild ride for the Canadian housing market. We've seen record highs, frantic bidding wars, and a lot of anxiety for both buyers and sellers. CREA's latest forecast, released in January 2025, suggests things might be settling down a bit, but not in a way that's going to make housing suddenly affordable for everyone.

Essentially, CREA believes that the combination of pent-up demand from people who've been waiting on the sidelines, and the anticipation of lower mortgage rates will fuel a rebound in market activity. Think of it as a coiled spring finally being released. We saw a bit of this in the last quarter of 2024, which seems to have given CREA more confidence in a strong 2025.

What’s Driving This Rebound?

The real question is, what’s making this all happen? Here’s what CREA and my own personal take on it:

• Lower Borrowing Costs: The main driver is the anticipation of lower mortgage rates. The Bank of Canada is expected to either have already paused or will pause interest rate increases, or potentially even lower them slightly. This is a big deal for potential buyers who've been sidelined by high borrowing costs. The mere signal from the Bank of Canada that they're done raising rates could unleash pent-up demand. Think of all the people who’ve been waiting for that moment before securing a fixed mortgage rate. This is a big motivator for many.
• Pent-Up Demand: Let’s face it, a lot of people have been waiting for the right time to buy. Over two years of market uncertainty means there's a considerable pool of potential buyers itching to get in. All this pent-up demand, like a coiled spring, is expected to contribute to more sales and higher prices.

Regional Differences in the Forecast

Now, here's where things get interesting. The rebound isn't expected to be uniform across the country. The market varies greatly from region to region:

• British Columbia and Ontario: According to CREA, these provinces are likely to see the biggest rebounds on the sales side. Sales in these areas have been particularly low, and they have relatively more homes available for sale (inventories), which may limit rapid price increases. These areas have been particularly hard-hit by affordability challenges. Personally, I feel this is partially because of the high cost of living in these provinces and the high property taxes in these areas.
• Alberta and Saskatchewan: In contrast, these provinces are expected to experience more price gains than sales growth. Why? Because sales in these regions have been robust in 2024, reaching near record levels and inventories are low. Also, prices in these provinces are relatively more affordable than elsewhere, so that will have a significant impact. This is what I've been personally noticing and hearing from friends and colleagues.
• Manitoba, Quebec, and the Atlantic provinces: These provinces are expected to fall somewhere in the middle with both increased sales and higher prices. These are areas that are generally doing well, economically speaking, so this trend doesn’t surprise me.

The Numbers Game: Sales and Prices

Let's delve into the data:

• 2025: CREA forecasts 532,704 residential properties to change hands via Canadian MLS® Systems, which is an 8.6% increase from 2024. That's a substantial jump. They also predict that the national average home price will climb by 4.7% to $722,221.
• 2026: The numbers continue to rise but at a slower pace. They're forecasting another 4.5% increase in national home sales to 556,662, and the average home price is expected to rise by 3.3% from 2025 to $746,379.

Here’s a quick recap table to visualize things:

Year	National Home Sales (Forecast)	Annual Change in Sales	Average Home Price (Forecast)	Annual Change in Price
2024	Actual (Not given)	N/A	Actual (Not Given)	N/A
2025	532,704	8.6%	$722,221	4.7%
2026	556,662	4.5%	$746,379	3.3%

What Could Throw a Wrench in the Works?

The forecast isn't without its risks:

• Too Much Demand, Too Soon: One risk is that all the pent-up demand shows up at once, creating an even more intense buying frenzy than anticipated. This could drive prices up sharply, which, let's be honest, would not be a good thing for affordability.
• Trade War with the United States: A potential major trade war with the United States is a significant concern. This is a new downside risk that could have major implications for the Canadian economy. The ramifications of this are not yet factored in the current forecast numbers. I believe this is a very real concern and can very easily disrupt economic stability.
• Unforeseen Economic Factors: As we know, economies are complex systems, and various unexpected factors could throw a curveball at these projections. The housing market is closely tied to jobs, income and borrowing rates. Changes in any of these variables will have an impact.

My Take: Cautious Optimism

While these forecasts paint a picture of growth, my gut tells me to approach this with cautious optimism. The potential for a trade war is a real wild card, and we all know how quickly the economy can change. While lower borrowing costs will certainly encourage people to buy, it’s not a silver bullet. For me, the situation highlights the need to look at the big picture, including the economic stability and the financial planning of your own family.

I think that if you are in a position to buy, do your homework. Consider your financial situation very carefully. If you are selling, keep a close eye on the market to see if the demand is what you expect it to be.

What Does This Mean for You?

So, what should you do with this information?

• Buyers: If you're looking to buy, be prepared for a competitive market. Don't get caught up in the frenzy. Shop around, get pre-approved and be realistic about your budget and expectations. I know that can be easier said than done, but it's important.
• Sellers: If you're considering selling, this forecast suggests that now could be a good time, especially if you're in a market that's expected to see increased demand. But again, don’t let the data completely influence your decision, always do your homework.
• Everyone: Keep an eye on what the Bank of Canada is saying and watch the news regarding trade negotiations with the US. These factors have a big impact on the economy and the housing market.

The Canada Housing Market Forecast for 2025 and 2026 is just a prediction. The real estate market is influenced by many things, and anything can happen. But for now, at least, we have an idea of what might be in store. Let’s hope that it’s a little less turbulent ride in the next few years than it has been in the past few. I’ll certainly be keeping a close eye on things, and so should you.