Muhammad Amanullah | July 23, 2026
Canada (Web News) – Canada Mortgage and Housing Corporation (CMHC) has revised its housing market outlook, predicting that home sales, average home prices, and new residential construction will decline across Canada in 2026 due to ongoing economic uncertainty and weaker housing demand.
The federal housing agency had previously forecast market growth earlier this year but has now updated its projections in response to changing economic conditions.
Economic Uncertainty Continues to Weigh on the Housing Market
According to CMHC, several factors are contributing to slower activity in Canada’s housing sector. These include persistent economic uncertainty, slower population growth, elevated borrowing costs, and cautious consumer spending.
The agency says these conditions are reducing buyer confidence and limiting housing market activity nationwide.
Home Sales and Prices Expected to Fall
CMHC forecasts approximately 457,200 home sales across Canada in 2026, down from 470,314 homes sold in 2025.
The agency also expects the average home price to decline to CAD $675,200, compared with CAD $679,543 recorded in 2025.
While the decline is relatively modest, it marks a reversal from earlier expectations that the market would continue to recover this year.
Forecast Revised Since February
Earlier in February 2026, CMHC projected that both home sales and prices would increase compared with 2025. However, the latest economic developments have prompted the agency to revise its outlook.
Officials say the updated forecast reflects weaker market conditions and growing uncertainty affecting both buyers and developers.
Trade Tensions and Global Risks Impacting the Economy
CMHC also highlighted ongoing geopolitical tensions and trade uncertainty between Canada and the United States as additional risks to the economy.
According to the agency, these uncertainties are influencing business investment decisions and hiring plans, creating additional pressure on Canada’s housing market.
New Home Construction Expected to Slow
The report projects approximately 241,400 housing starts in 2026, compared with 259,028 housing starts in 2025.
This indicates a noticeable slowdown in new residential construction across the country as developers respond to weaker demand and higher construction costs.
Builders Facing Multiple Challenges
CMHC says homebuilders continue to face several obstacles, including:
- Weak demand for newly built homes.
- Rising inventories of unsold properties.
- Higher construction and financing costs.
- Increased market uncertainty.
These challenges are expected to limit the pace of new residential development throughout 2026.
Recovery Expected in 2027 and 2028
Despite the weaker outlook for 2026, CMHC believes Canada’s housing market will gradually recover over the following two years.
The agency expects improving economic conditions, greater market confidence, and easing uncertainty to support stronger home sales and price growth during 2027 and 2028.
Housing experts note that the pace of recovery will largely depend on future interest rate decisions, inflation trends, employment growth, and the overall performance of the Canadian economy.
Key Highlights
- CMHC expects home sales to decline to 457,200 in 2026.
- Average home prices are forecast to fall to CAD $675,200.
- Housing starts are expected to decrease to 241,400 units.
- Economic uncertainty, high borrowing costs, and slower population growth remain the biggest challenges.
- A gradual housing market recovery is anticipated in 2027 and 2028.
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CMHC forecasts a decline in Canada’s home sales, average home prices, and residential construction in 2026, citing economic uncertainty, high borrowing costs, and slower population growth. Recovery is expected in 2027 and 2028.
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