TD Economics has revised its 2026 forecast for home sales and prices, anticipating a decline in both metrics due to lackluster performance in the previous two quarters. The latest projections suggest a 1.8% year-over-year drop in sales and a marginal 0.3% decrease in national home prices.
The initial outlook in December had painted a more optimistic picture, with a projected 9.3% increase in home sales and a 4.1% rise in average home prices for 2026. Economist Rishi Sondhi highlighted that the recovery of housing activity from first-quarter setbacks is expected to be gradual, attributed to a subdued economy, heightened uncertainty, and persistent cost-of-living pressures.
Notable declines in housing activity were observed in Central and Atlantic Canada, as well as in British Columbia, where milder conditions did not shield the market from weakness. Ontario and B.C. received the most significant downward revisions in sales and prices after substantial declines in the first quarter. Affordability challenges and a wait-and-see approach from potential buyers were cited as factors contributing to the market conditions in these provinces.
TD’s previous expectations of a 13% rise in home sales for Ontario and a 15.1% increase for B.C. have been adjusted downward. The current forecast indicates a 3.2% decrease in transactions for Ontario and a 0.2% dip in B.C. Prices are projected to decrease by four percent in Ontario and 1.2% in B.C., contrasting with the earlier forecasts of gains.
Sondhi emphasized that pent-up demand has not materialized as swiftly as anticipated in these regions, hinting that further price adjustments might be necessary to stimulate activity. He also noted potential risks, such as geopolitical tensions in the Middle East, which could impact oil-producing and importing regions, influencing the housing market dynamics in Ontario and B.C.
Looking ahead, TD anticipates a rebound in Canadian home sales in 2027, driven by improved economic conditions and job market stability. The revised forecast projects a 9.6% year-over-year increase in home sales and a 2.7% rise in average prices for 2027. The looming CUSMA negotiations are flagged as a crucial factor that could impact the broader economy and housing sector.