Canada Mortgage and Housing Corp. (CMHC) has downgraded its outlook for the country’s housing market, now forecasting declines in both home sales and average prices in 2026 before a modest recovery takes shape over the following two years.
The drop in the forecast comes as the housing sector faces increasing pressure with economic uncertainty, slower population growth and borrowing costs expected to continue to weigh on buyer activity throughout the year.
CMHC now projects 457,200 homes will be sold in 2026, down from 470,314 sales recorded in 2025. The agency also expects the average home price to fall to $675,200, compared with $679,543 last year.
The latest outlook is a major departure from CMHC’s previous forecast in February that predicted home sales and prices to climb in 2026.
According to the agency, uncertainty remains elevated as geopolitical tensions continue to put upward pressure on inflation, while ongoing trade uncertainty between Canada and the United States is affecting business investment and hiring decisions. Those factors are expected to limit consumer confidence and slow activity across the housing market.
Construction activity is also expected to ease. CMHC forecasts 241,400 housing starts in 2026, down from 259,028 recorded in 2025.
Builders face a number of headwinds, including softer demand, an increasing supply of unsold homes and persistently high construction costs, which are all expected to weigh on new residential development during the year.
For 2026 the outlook is softer, but CMHC continues to expect modest growth in the housing market in 2027 and 2028 as market conditions slowly improve.
