TD Economics has revised its predictions for home sales and prices in 2026, anticipating a decline rather than an increase. Sales are projected to decrease by 1.8% year-over-year, while home prices are expected to dip by 0.3% on a national scale. This adjustment comes after weaker performance in the housing market during the last two quarters.
Economist Rishi Sondhi attributed the sluggish housing activity to various factors such as a subdued economy, increased uncertainty, and ongoing cost-of-living pressures. He noted that it may take most of the year for the market to recover from first-quarter losses.
Ontario and British Columbia received significant downgrades in sales and prices due to notable declines in the first quarter, with affordability challenges hindering potential buyers in these provinces. The report highlighted that buyers in Ontario and B.C. are likely waiting for the market to stabilize before making significant moves.
TD Economics previously anticipated a rise in home sales in Ontario by 13% and in B.C. by 15.1%. However, the revised forecast now predicts a 3.2% decrease in Ontario and a 0.2% decline in B.C. Prices are also expected to fall in both provinces, with a projected 4% decrease in Ontario and a 1.2% decline in B.C.
Sondhi mentioned that pent-up demand has not returned as quickly as expected in Ontario and B.C., indicating that further price adjustments might be necessary to stimulate activity. He also highlighted potential risks, such as geopolitical tensions in the Middle East, which could impact the housing market dynamics.
Looking ahead, TD Economics foresees a rebound in Canadian home sales in 2027, driven by improved economic conditions. The report suggests that better economic and job market conditions could lead to a 9.6% increase in home sales and a 2.7% rise in average prices in 2027.