CMHC expects slow economic growth, weak housing demand, declining home prices, lower housing starts and easing rental markets in 2026. Housing market conditions are expected to improve gradually in 2027 and 2028.
Highlights
We expect the economy to grow slowly in 2026. Stronger underlying activity from consumer spending, government investment and exports will be offset by ongoing geopolitical and trade uncertainty. Growth is projected to improve moderately in 2027 and 2028.
Housing activity will likely remain weak in the near term, as very slow population growth, uncertainty, high borrowing costs and modest income growth continue to limit demand. We expect sales to improve gradually over the forecast period but to remain below levels typically seen in the last decade.
We expect continued downward pressure on home prices and construction. Average prices will likely decline in 2026 and then rise slowly, while housing starts will continue to fall throughout the forecast period due to weak demand, high costs and elevated inventories.
Rental construction is expected to ease gradually from its historical 2025 peak. Rent growth will slow, but rents are still high relative to incomes.
Economic forecast: Slow growth amid uncertainty
Our Canadian economic outlook has changed little since the Winter Housing Market Outlook. Baseline growth in 2026 is still expected to be a modest 0.7%. Consumer spending, government investment and a rebound in exports should support growth. On the other hand, weaker residential construction and strong import growth should weigh on the economy.
Uncertainty remains high throughout the forecast period. Global tensions, especially the U.S.-Iran war, will likely push inflation up temporarily in 2026. Ongoing U.S.-Canada trade uncertainty will likely weigh on business investment and hiring decisions.
Economic conditions will vary across the country. Western Canada is expected to lead growth in 2026, helped by stronger commodity prices resulting from the U.S.-Iran war. Central Canada is more affected by trade risks and is likely to lag. Conditions in Atlantic Canada remain the weakest. After 2027, economic growth should pick up compared with 2026, but it will still be moderate. As the economy strengthens more broadly, differences between regions should narrow, supported by more diversified trade and stronger business investment.
These economic conditions set the backdrop for the housing market outlook in Canada. Uncertainty and subdued economic and income growth continue to limit housing demand in the near term.
Housing forecast: Uneven adjustment to soft housing demand
Housing market activity in 2026 has so far been weaker than expected, particularly in sales and prices. This reflects slower population growth, ongoing economic uncertainty, high mortgage rates and slow income growth. Buyers continue to act cautiously. As a result, improved affordability alone hasn’t been enough to bring many buyers back into the market.
As economic growth and income gains strengthen in 2027 and 2028, buyer confidence should improve, and housing demand should gradually recover from these weak levels. Sales are expected to increase gradually over the forecast period but remain below typical levels seen in the last decade.
Conditions will differ across regions. Market momentum is expected to keep sales high in Prairie and Quebec markets. In contrast, British Columbia and Ontario will likely continue to struggle with historically weak sales levels due to affordability challenges and slower population growth.
Home prices will continue to adjust to weak housing demand and muted sales. Prices are expected to decline through 2026 and then grow only modestly afterward. Overall, very slow population growth and limited income gains should keep price increases moderate across the country.
Prairie markets will likely lead price growth because demand remains strong in that region, while Quebec should see modest gains due to more balanced market conditions. British Columbia and Ontario are likely to see the weakest growth because of slower population growth, affordability challenges and higher supply.
Subdued housing demand will also weigh on new construction. Housing starts are expected to decline further as builders continue to respond to unsold inventories and high construction costs. Historically low levels of construction will be most visible in Ontario and British Columbia, particularly in the condominium market. Housing starts in the Prairies and Quebec will also decline, but from recent peaks. Rental construction is expected to ease gradually from its historic 2025 peak. Maintaining a sustainable level of rental construction remains important to support future housing needs, particularly as demand currently suppressed by affordability constraints should materialize towards the end of the forecast horizon.
National rental markets should continue easing in 2026. New supply is increasing, especially from purpose-built rental projects. This will help lift vacancy rates and slow average rent growth, particularly for asking rents. This easing is more noticeable in larger markets such as Toronto and Vancouver, which are more affected by slower population growth and a larger supply of condominiums in secondary rental markets. In contrast, Prairie markets will likely continue to see modest rent increases, reflecting stronger demand.
Although overall rental conditions are improving, affordability remains a challenge. Rents are still high relative to income, especially when units turn over.
Alternative scenario
Downside risks to the forecast remain. Inflation could remain high if the U.S.-Iran war drives oil prices higher and further disrupts supply chains, or if trade tensions intensify. This would further weaken confidence and slow income growth. In this case, housing demand would remain soft for longer. Home sales, prices and construction would recover more slowly, and rental markets would continue to ease as supply outpaces demand.
Forecast Summary (Calgary)
Total Starts (New builds)
- 2024_ 24,369
- 2025_ 27,684
- 2026_ 22,000 Forecast baseline
- 2027_ 21,000 Forecast baseline
- 2028_ 19,000 Forecast baseline
Resale Market
MLS Sales
- 2024_ 34,567
- 2025_ 27,902
- 2026_ 26,500 Forecast baseline
- 2027_ 26,000 Forecast baseline
- 2028_ 27,000 Forecast baselineMLS Average Price
- 2024_ $622,457
- 2025_ $644,091
- 2026_ $650,000 Forecast baseline
- 2027_ $645,000 Forecast baseline
- 2028_ $650,000 Forecast baseline
Rental Market
Vacancy Rate
- 2024_ 4.8
- 2025_ 5.0
- 2026_ 5.9 Forecast baseline
- 2027_ 6.2 Forecast baseline
- 2028_ 5.8 Forecast baselineAverage rent: Two-bedroom
- 2024_ $1882
- 2025_ $1914
- 2026_ $1948 Forecast baseline
- 2027_ $1982 Forecast baseline
- 2028_ $2030 Forecast baseline
Courtesy CMHC
