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Provincial Housing Market Outlook:

Steep Downgrades Amid Persistent Housing Headwinds

Rishi Sondhi, Economist | 416-983-8806

Date Published: March 26, 2026

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    Chart 1 is a bar chart of quarter over quarter Canadian home sales growth (%), comparing March vs December forecasts. In 2025Q3, growth is revised to about 6% in March from roughly 6½–7% in December. 2025Q4 shifts to a decline of about 2% versus a small gain near 0.5% previously. The largest downgrade is in 2026Q1, now around 7% compared with about +2% before. Growth rebounds in 2026Q2 to roughly 5% versus ~2% in December but remains weaker in 2026Q3 (about 1% vs ~2½%) and 2026Q4 (about 1½% vs ~2%).
  • Weaker-than-expected performances in 2025Q4 and especially 2026Q1 have prompted a steep downgrade to our forecasts for 2026 annual average Canadian home resales and price growth (Chart 1). While severe weather in Central and Atlantic Canada weighed on activity early in the year, weakness was also evident in B.C., where conditions were more temperate. Sales are likely to take most of the year to recoup first quarter losses, as housing remains constrained by a subdued economy, heightened uncertainty, and ongoing cost of living pressures.
  • Interest rates are expected to be a largely neutral factor for the outlook in 2026 (Chart 2), with the Bank of Canada likely to remain on hold and no major movements expected in bond yields (which help determine fixed mortgage rates). 
  • Canada’s population declined last year for the first time since Confederation, driven by losses in Ontario and B.C. (Chart 3). Softer rental demand and falling rents are discouraging investor activity in both provinces. Alberta stands out, with the strongest population growth nationally, supported by immigration. Interprovincial migrants continue to flow into the province, bolstering ownership demand.
    • Chart 2 is a line chart showing the Bank of Canada policy rate falling from about 5.0% in 2024q1 to 4.75% in 2024q2, 4.25% in 2024q3, and 3.25% in 2024q4, then easing to around 2.75% in 2025q1–q2 and 2.5% in 2025q3. From 2025q4 through 2026Q4, the forecast shows the rate holding steady at 2.25%. Chart 3 is a bar chart showing year over year population growth at the start of 2026q1. Alberta leads at about +1.2%, while Atlantic Canada and MB+SK are near +0.1%. Quebec is slightly negative at around 0.1% and Canada overall is about 0.25%. The largest declines are in BC (around 0.7%) and Ontario (around 0.7%).
  • Ontario and B.C. have seen the sharpest downgrades to sales and price growth following significant first quarter declines. In addition to broader macro headwinds, strained affordability continues to weigh on demand, and falling prices are likely keeping potential buyers sidelined as they wait for a clearer bottom (Chart 4). Pent-up demand has yet to re-emerge as quickly as previously expected (Chart 5), suggesting further price declines may be needed to unlock it. The GTA condo market remains the weakest in the country, with elevated supply needing to be absorbed before prices stabilize (Chart 6). Conditions favour buyers across the GTA, surrounding regions, and Southwestern Ontario, while markets are somewhat firmer in Eastern Ontario and considerably tighter in Northern Ontario (Chart 7).
    • Chart 4 is a bar chart showing year over year average home price growth (3 month moving average) by region. Saskatchewan and Manitoba lead with gains of about +8.5%, followed by Quebec near +6.2%. Atlantic Canada and Alberta post moderate increases of roughly +2.9% and +2.8%. Canada overall is slightly negative at around 1.5%, while British Columbia and Ontario record larger declines of about 3.4% and 5.6%, respectively. Chart 5 is a line chart showing monthly home sales in thousands for Ontario (LHS, dashed) and British Columbia (RHS, solid) from Mar 2019 to Sep 2025. Ontario sales average ~15–20k pre 2020, fall to ~7k in Apr 2020, rebound to ~26k in early 2021, then decline to ~12–14k through 2023–2025. B.C. sales average ~5–7k pre 2020, drop to ~3k in Apr 2020, peak near ~13k in early 2021, then ease to ~6–7k from 2023 to 2025, remaining near lows in both provinces.
    Chart 6 is a line chart showing GTA active condo listings (thousands) rising over time. Listings increase from about 2.2k in 2000 to 5.5k in 2004, fluctuate between 4.5k–6.5k from 2005–2014, drop to a low near 2.0k in 2016, then rise sharply after 2021, peaking around 10.0k in 2024, before easing to about 8.0k in 2025. Chart 7 is a bar chart showing February sales to new listings ratios (3 month moving average) across Ontario regions. The GTA is lowest at about 34%, followed by the GTA Commuter Belt at 37% and Cottage Country at 38%. Ratios rise to 41% in Southwestern Ontario and 46% in Eastern Ontario and are highest in Northern Ontario at about 64%. A dashed line marks the post GFC average near 58%, which only Northern Ontario exceeds.
  • Across the Prairies, cooling job and population growth should result in sub trend quarterly price gains this year. In Alberta, a rapid increase in supply alongside normalizing demand has rebalanced markets. By contrast, conditions remain tighter in Manitoba and Saskatchewan, where supply growth has been more limited (Chart 8). These tighter starting points—combined with relatively strong affordability in Saskatchewan—should support firmer price gains in those provinces.
    • Oil prices have soared amid Middle East tensions. At this point, nobody knows how the situation will evolve, but our working assumption of a shorter conflict means that oil prices will moderate after peaking in the second quarter, but remain above our prior forecast this year (Chart 9).
      • Chart 8 is a bar chart showing February 2026 sales to new listings ratios (3 month moving average). Manitoba is highest at about 71%, Saskatchewan follows at roughly 69%, Alberta is lower at around 61%, and Canada overall is weakest at about 48%. Red markers show post GFC averages of about 65% for Manitoba, 53% for Saskatchewan, 58% for Alberta, and 59% for Canada. Chart 9 is a line chart of WTI oil prices (US$/barrel) from 2024Q3 to 2026Q1 comparing a December forecast with a current path. Prices ease from the mid $70s in late 2024 to around $60 by 2025Q4 in both series, but the current path then jumps sharply to the mid $90s in 2026Q1, diverging from the December forecast, which remains near the high $50s.
    • Higher energy prices are a net positive for Alberta, Saskatchewan and Newfoundland and Labrador. Our models tell us that, given our assumptions around the path for oil, average home prices could be about 1% higher in Alberta by the end of 2026 versus a situation where oil evolved in line with our December view. One could pencil in about half that increase in Saskatchewan. A similar gain to Alberta could manifest in Newfoundland and Labrador, with some upside risk because the province’s tight market could amplify the price boost. On the opposite end, rising energy costs sap purchasing power to varying degrees in other parts of the country, which could weigh on housing demand.
  • In Atlantic Canada, Newfoundland and Labrador is expected to post the strongest price growth in the region this year, repeating its 2025 performance (Chart 10). Higher oil prices, tight supply/ demand balances, and still affordable housing should support gains, while the economy remains relatively shielded from U.S. trade frictions. Interprovincial migrants are still flowing to PEI and Nova Scotia, lifting housing demand and prices. Both economies should also enjoy reasonable economic growth performances this year, supporting price gains. Falling interprovincial migration in New Brunswick underpins our view of relatively modest price growth in the region this year (Chart 11).
    • Chart 10 is a bar chart showing average home price year-over-year percent change in Atlantic Canada for 2025 and 2026. In Newfoundland and Labrador, prices rise about 8.3% in 2025 and 5.5% in 2026. In Nova Scotia, growth is roughly 5.5% in 2025 and 4.7% in 2026. Prince Edward Island shows slower growth of about 2.5% in 2025, picking up to 3.9% in 2026. In New Brunswick, prices increased around 5.6% in 2025, with growth easing to about 2.9% in 2026. Chart 11 is a line chart showing net interprovincial migration, persons, from 2023Q1 to 2025Q4 for New Brunswick and the rest of Atlantic Canada. For the rest of Atlantic Canada, net inflows start around 2,750 in 2023Q1, ease to about 2,250 by 2023Q3, peak near 2,900 in 2023Q4, then trend lower to roughly 1,100 in 2024Q4, before stabilizing around 1,050 to 1,200 through 2025Q3 and rising to about 1,350 in 2025Q4. For New Brunswick, net inflows begin near 1,150 in 2023Q1, rise to about 1,350 by 2023Q4 and peak around 1,500 in 2024Q1, then fall sharply to roughly 100 in 2024Q3 and 200 in 2024Q4. In 2025, New Brunswick turns negative, at about minus 300 in 2025Q2, improving slightly to around minus 100 by 2025Q4.
    Chart 12 is a bar chart showing year-over-year percent change in Quebec real GDP and employment for 2024 to 2026. In 2024, real GDP grew by about 1.7% while employment rises roughly 0.9%. In 2025, real GDP growth slows to around 1.0%, while employment growth increases to about 1.7%. In 2026, real GDP growth moderates further to roughly 0.8%, while employment declines by about 0.3%. The 2026 values are shown as a forecast.
  • In Quebec, deteriorated affordability, a soft economy and a rapidly cooling jobs market should weigh on home sales and average home prices as the year progresses (Chart 12), but tight early year supply/demand balances should support decent growth for the next few months, leaving a firm 2026 overall gain.
  • Looking ahead to 2027, improved economic and labour market conditions, waning uncertainty, and affordability gains from prior price declines in Ontario and B.C. should support a rebound in Canadian home sales from their 2026 lows. This will likely push national average price growth back into positive territory, though gains are expected to remain modest amid subdued conditions in Ontario and B.C. and moderating growth elsewhere.
  • Risks to the outlook are skewed in both directions. A broader or more prolonged escalation of Middle East tensions could support activity in oil producing regions but weigh more heavily on oil importers. On the upside, pent up demand in Ontario and B.C. could be unleashed faster or more forcefully than expected. Upcoming CUSMA negotiations also loom large for the broader economy and, by extension, the housing market.

Forecast Table
Home Sales and Price Outlook

 

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