After a tumultuous 2025 marked by economic and political shifts, 2026 emerges as a crucial reset year for Canada’s housing market. According to the Royal LePage Market Survey Forecast, Canada’s residential real estate market is expected to post modest price gains next year and an increase in sales activity, as buyers continue to move off the sidelines. The aggregate price of a home in Canada is set to remain relatively flat, increasing a modest 1.0 per cent year over year to $823,016 in the fourth quarter of 2026. The median price of a single-family detached property is expected to increase 2.0 per cent to $876,934, while the median price of a condominium is anticipated to decrease 2.5 per cent to $563,918.
“Solid market fundamentals – including lower interest rates, increased supply, and reduced competition – have created a more favourable environment for consumers,” said Phil Soper, president and chief executive officer, Royal LePage. “First-time buyers and those searching in the country’s most expensive regions have a rare window to act on their home ownership plans at reduced prices. While we don’t expect a sharp rebound, this improved affordability will rebuild market confidence among both buyers and sellers, setting the stage for more sustainable, albeit modest, price growth in 2026.”
Phil Soper
Home prices are expected to rise in major markets across the country in 2026, with the exception of Canada’s two most expensive cities. The aggregate price of a home in the Greater Toronto Area and Greater Vancouver is forecast to decrease 4.5 per cent and 3.5 per cent year over year in the fourth quarter of 2026, respectively. During the same period, the aggregate price of a home in the Greater Montreal Area is expected to rise 5.0 per cent. For the second consecutive year, Quebec City is forecast to see the greatest gains among all major regions, with an anticipated increase in the aggregate home price of 12.0 per cent. Regina, which continues to see robust demand and constrained supply, is anticipating a 4.0 per cent increase in home prices over the same period. Meanwhile, Ottawa, Calgary, Edmonton, Halifax and Winnipeg are expected to see prices rise no more than two per cent in 2026, explained the report.
“2025 forced us to recalibrate. Indications are that Canadians are now increasingly adapting to the noise from Washington and confidence at home is holding firm. We saw steady, incremental growth in sales activity in the back half of the year – a clear sign that those who put major decisions on hold are ready to move forward in 2026,” said Soper.
Rate cut cycle comes to a close
In 2025, the Bank of Canada reduced its target for the overnight lending rate four times, bringing the key rate down to its current level of 2.25 per cent. After an 18-month rate-cutting cycle that followed two-decade-high interest rates, the Bank has now shifted its focus to supporting a cooling economy while keeping inflation on a sustainable path. Economists widely expect the Bank will only make further cuts if the economy shows major signs of weakness as Canada continues to navigate trade tensions with the United States, said Royal LePage.
“Mortgage rates are no longer the villain in this story. Borrowing costs have stabilized at a level that supports healthy market activity. Buyers can move forward without worrying they are missing out on cheaper money tomorrow. That clarity alone will unlock demand,” said Soper.
According to a recent Royal LePage survey, conducted by Burson, 28 per cent of Canadians who currently rent say that, before signing or renewing their current lease, they considered buying a property rather than renting. When asked what factors influenced their decision to rent instead, 40 per cent of respondents said they were waiting for property prices to decline, and 29 per cent were waiting for interest rates to decrease further. Respondents could select more than one answer.
Photo:
Yunus Tuğ
Building efforts intensify, but barriers to boost supply remain
Stakeholders across the country are making efforts to increase housing inventory, though not without facing headwinds, said the real estate firm.
According to a recent Canada Mortgage and Housing Corporation (CMHC) report, combined housing starts in Canada’s seven major census metropolitan areas during the first half of 2025 remained near record highs, coming in just below 2024 levels. Yet, the push to grow supply has played out unevenly across the country. Strong gains in housing starts in Calgary, Edmonton, Montreal and Ottawa were offset by weaker investor demand in Toronto and Vancouver, illustrating sharp regional differences, it said.
Building activity in Canada’s most expensive cities has been hit particularly hard. As of mid-2025, Toronto is on pace for its lowest level of housing starts in three decades. This coincides with a major slowdown in pre-construction sales, which have continued to drastically decrease as investor demand has declined this past year, prompting project cancellations and delays. Vancouver is experiencing similar pressures and is expected to see a further decline in total housing starts this year, according to the report.
“Increasing supply remains critical to achieving long-term affordability. We cannot afford to scale back on efforts to meet the country’s pent-up housing demand, even if buyer and investor activity has softened in the short term,” said Soper. “Building the right types of homes is equally important. Missing-middle options like duplexes, triplexes and townhomes provide the balance of space and density Canadians are seeking, without driving development further outward through unnecessary urban sprawl. Cities such as Edmonton and Calgary highlight what’s possible when housing construction is guided by intention, flexibility and a commitment to affordability. That’s the direction Canada must continue to pursue.”
Government stability brings renewed focus to housing
“2026 sees key market fundamentals pointed in the right direction. Recent polls indicate Canadians are satisfied with our political leadership, opening the door for much-needed progress on housing policy,” said Soper. “The 2025 federal budget laid important groundwork – from funding commitments into Build Canada Homes (BCH) to major infrastructure projects – but the real test will be how effectively those measures are executed in the year ahead. If Ottawa follows through, 2026 could be the year we start to see long-promised initiatives turn into real progress for the Canadian real estate industry.”
Introduced in September, BCH is a new government agency responsible for developing, financing and managing affordable housing projects. As part of its first initiative, six public land sites under the Canada Lands Company portfolio have been earmarked to deliver 4,000 factory-built homes, added the report.
“2026 will be a transition year for Canada’s housing market, as improved affordability and less competitive conditions continue to favour buyers. We expect activity to build slowly over the next several months, and if the spring market coincides with steadier economic and trade conditions, buyer confidence could strengthen in tandem.
“Canada’s housing market is moving forward again,” Soper concluded. “Improved conditions are drawing buyers back, step by step. The reset is behind us – now we build.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024 and 2025.
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