Market Memo: Quarterly Report – August 2026

The housing market seems likely to continue drifting through the doldrums for the next year, or so, according to Canada Mortgage and Housing Corporation. 

Ongoing Slowness 

The federal housing agency expects that economic growth for this year will come in at a modest 0.7%, supported by consumer and government spending, and improving exports.  But CMHC says uncertainty brought on by the war in Iran and U.S. trade tensions will continue to hold back the economy and, by extension, the housing market.  CMHC expects these conditions could persist into 2028. 

Buyers Being Cautious 

So far this year, the agency says the housing market has been under performing in terms of sales and pricing.  Along with the geopolitical uncertainty CMHC blames declining population growth, increasing interest rates and slow income growth.  These factors appear to be outweighing improved affordability and are discouraging cautious buyers from entering the market. 

Improvement is Coming 

The agency does expect to see things start to turn around through 2027 and into 2028.  It hopes to see buyer confidence build throughout the forecast period as economic growth and income gains improve.  However, sales will likely remain below levels of the past 10 years. 

Improvements are expected to be modest and uneven across the country.  The most aggressive price growth is forecast for the prairies where demand remains strong.  Quebec is also expected to show growth, but more modestly than the west.  Ontario and British Columbia are likely to see the weakest growth because of slower population growth, affordability challenges and greater supply.

Construction Forecast 

Ontario and B.C. will, also, likely show the greatest slowdown in new construction.  The main culprit there is the condo market which has been stalled by declining immigration and rising interest rates.

Rentals 

CMHC seems hopeful that the increasing construction of purpose-built rental units will continue.  Building more rental stock should improve vacancy rates and moderate rent prices. 

- First National Financial LP