TD Economics has revised its 2026 outlook for home sales and prices, anticipating a decline in both metrics this year following lackluster performance in the prior two quarters. The forecast now projects a 1.8% year-over-year drop in sales and a marginal 0.3% decrease in national home prices. Initially, in December, TD had predicted a 9.3% increase in home sales and a 4.1% rise in average prices for 2026.
Economist Rishi Sondhi highlighted that the housing market is expected to take most of the year to recover from first-quarter setbacks. Factors such as a subdued economy, increased uncertainty, and ongoing cost-of-living pressures continue to constrain sales activity. The report noted that severe weather conditions in Central and Atlantic Canada affected early-year housing market performance, while weakness was also observed in British Columbia despite milder weather conditions.
Ontario and B.C. saw significant downgrades in sales and prices after notable declines in the first quarter. Affordability challenges persist in these provinces, leading potential buyers to await a market stabilization. TD’s previous projections of a 13% and 15.1% sales increase in Ontario and B.C., respectively, have been adjusted to lower figures. Ontario is now expected to witness a 3.2% decrease in transactions, while B.C. is forecasted to experience a 0.2% decline.
Price expectations have also been revised, with Ontario anticipating a 4% decrease and B.C. expecting a 1.2% decline, as opposed to the previously forecasted gains. Sondhi noted that pent-up demand has not resurfaced as quickly as anticipated in these regions, potentially necessitating further price adjustments to stimulate market activity. He warned of lingering risks, including geopolitical tensions in the Middle East, which could impact oil-producing regions and oil importers differently, affecting the housing market dynamics in Ontario and B.C.
Looking ahead, TD’s report suggests a rebound in Canadian home sales in 2027, driven by improved economic and job market conditions. This positive outlook could also contribute to an increase in the national average home price. TD’s current projection for 2027 includes a 9.6% year-over-year surge in home sales and a 2.7% rise in average prices.