How Much Will Home Prices Increase in 2026
As the housing market continues to adjust after several years of rate volatility, homeowners and prospective buyers are once again trying to gauge where prices are heading. After a prolonged period of elevated borrowing costs and affordability strains budgets, more buyers are cautiously waiting to see what’s next for the housing market. The question remains: Will affordability improve, or will we see home prices increase in 2026?
While no forecast can perfectly predict what might transpire year over year, we will aim to provide valuable insight into what experts predict for Canada’s real estate market in the year ahead.
Key Takeaways
- Home prices are likely to rise modestly in 2026, with varying regional differences.
- Tight supply and limited new construction continue to support prices.
- More balanced markets are emerging, but entry-level homes remain competitive.
Housing Market Price Outlook for Canada
Canadian real estate remains sensitive to interest rates, inventory levels, and population growth. In many regions, markets have shifted back toward seller-friendly conditions as listings fail to keep pace with underlying demand. While price growth has moderated, upward pressure has not disappeared. Demand has proven more resilient than expected, particularly for entry-level homes.
Price growth has moderated in some regions compared to the rapid gains seen earlier in the decade, but that slowdown reflects financial constraints more than a lack of interest. Higher home prices, borrowing costs, and the stress test have capped what buyers can afford, reducing sales activity, particularly in higher-priced regions of the country.
As mortgage rate expectations stabilize and confidence improves, buyers who delayed purchasing are slowly returning, often competing over a limited pool of listings. This dynamic continues to place pressure on prices, even in markets where sales volumes remain below historical norms. The result is a housing market that is no longer overheating, but still structurally undersupplied.
The Canadian Real Estate Association (CREA) Price Predictions for 2026 and 2027
The Canadian Real Estate Association’s (CREA) updated Resale Housing Market Forecast for 2026 and 2027 notes that activity is expected to pick up in 2026. This forecast for higher activity stems from pent-up demand from first-time buyers who have been locked out of the market over the past four years. With interest rates down, CREA expects homeownership to be more attainable, even as affordability remains a challenge.
Home prices in 2026 are forecast to rise 2.8% to $698,881 nationally on an annual basis. British Columbia, Alberta, Ontario and Nova Scotia are anticipated to see smaller price increases. Meanwhile, Saskatchewan, Quebec and Newfoundland and Labrador are expected to see larger increases.
In 2027, home prices are forecast to increase by 2.3% from 2026, reaching $714,991. Saskatchewan and Quebec are expected to see slightly larger gains.
REMAX 2026 Canadian Housing Market Outlook
According to REMAX’s housing market outlook, just over a third of markets are expected to transition to balanced market conditions in 2026. Their housing experts predict home sales will increase 3.4% due to signs of renewed buyer intent in the fall of 2025, compared with the first half of the year. National average home prices are expected to fall by 3.7% as prices moderate amid more inventory and balanced market conditions.
According to the Leger survey, 10% of Canadians plan to purchase in the next 12 months, even as more than half of Canadians feel the economy will worsen in 2026. Meanwhile, many buyers are continuing to watch the market for the right moment.
REMAX expects regional markets to react very differently over the year, driven by factors such as inventory levels, prices, and buyer demand in each region.
Calgary
Calgary’s housing market outlook expects no changes to home sales or prices year-over-year. Low inventory, steady prices, and a high demand for detached homes shape the balanced market in this region.
Edmonton
Edmonton’s housing market outlook expects home prices to increase 2% year-over-year, with sales down 2%. Strong buyer demand, price growth, and low supply are shaping the balanced market conditions expected in this region.
Hamilton-Burlington
Hamilton’s housing market expects home prices to increase by 2% and sales to increase by 3%. Declining property values, softer buyer demand, and a growing housing stock are shaping the balanced market conditions expected in this area.
London
London’s housing market is expected to see no changes in home prices compared to last year, with sales increasing by 5%. The area is likely to be in a buyer’s market due to stable home values, rising supply, and cautious buyer activity.
Ottawa
Ottawa’s housing market is expected to see home prices rise by 3% and sales increase by 5%. Rising buyer activity, stable price growth, and tight entry-level activity are expected to dictate the balanced market conditions in this region over the year.
Toronto
Toronto’s housing market is expected to see home prices decline by 3.5% and sales increasing 5% year-over-year. The buyers and balanced market conditions are influenced by softening home prices, easing buyer activity, and rising inventory levels in the region.
Vancouver
Vancouver’s market outlook expects home prices to decline 2% year over year, while sales activity is expected to increase 4%. This outlook is due to high inventory, softening prices, and cautious buyers in the region, creating buyer’s and balanced market conditions.
Winnipeg
Winnipeg’s housing market outlook expects prices to increase 3%, with sales increasing a modest 0.5% year-over-year. Rising home prices, active buyer demand, and growing housing supply in the region are expected to drive balanced market conditions.
Factors That Impact Home Prices In Canada
A mix of economic conditions, policy decisions, and market dynamics influences home prices in Canada. Interest rates, employment, population growth, and housing starts all affect buyer affordability. When these all move out of sync as they have in recent years, home prices can remain elevated even as sales activity slows.
1. Economic Conditions and Government Policy
When unemployment rates are low and the economy is growing, people are more likely to buy homes, driving up demand and prices. Government policies, such as tax incentives, can also impact home prices.
For example, incentives to purchase a home, such as tax credits or programs like the Home Buyers’ Plan (HBP), can encourage first-time buyers to enter the housing market, driving demand. Meanwhile, anti-flipping taxes, cuts to immigration admissions, and the ban on foreign buyers, extended until January 1st, 2027, are expected to reduce demand.
2. Interest Rates
Interest rates play a central role in shaping Canada’s housing market because they directly influence affordability, qualification, and buyer behaviours. When rates are lower, borrowing power increases, and more households can qualify under the mortgage stress test rules. This typically leads to higher demand and home prices when borrowing is more affordable. Lower rates also encourage move-up buyers and investors to re-enter the market, adding further pressure on regions with lower housing supply.
When interest rates are higher, borrowing power and affordability decrease. This can significantly reduce the amount borrowers can qualify for, quickly sidelining many households and forcing others to adjust their expectations. Higher rates may reduce sales activity and cool prices, particularly in higher-priced regions. Higher rates discourage borrowing, and many will wait until affordability improves before returning to the market.
3. Inventory
Supply-and-demand dynamics in the real estate market can significantly affect home prices. If there is a limited number of homes for sale, prices will likely be higher as competition intensifies, even if sales activity slows. When supply exceeds demand, buyers have more leverage, and prices may need to be adjusted to meet buyer expectations. This can help slow price growth or lead to modest price declines as sellers adjust their expectations to align with the market.
Housing supply in Canada hasn’t grown fast enough to ease price pressures, leaving inventory levels tight in many areas and adding to affordability challenges. Some homeowners may hesitate to list their homes for sale because selling at today’s prices may not provide enough equity to comfortably fund a new purchase. This reluctance to list restricts resale supply, reinforcing tight market conditions and limiting how much prices can soften during periods of weaker demand.
4. New Construction
New construction also influences home prices, but its ability to ease affordability pressures is limited. While building activity has improved, the pace of completions has not been sufficient to materially change supply conditions. As a result, even when housing starts appear strong on the surface, the number of completed homes entering the market often lags demand. Elevated construction costs, labour shortages, and a lack of buyers have made it more difficult for developers to bring projects to market, particularly in major urban centres.
According to the most recent CMHC Housing Supply Report, housing starts matched the near-record levels from the same period in 2024. Calgary, Edmonton, Montréal, and Ottawa led housing starts with rental apartment construction. Meanwhile, Halifax, Toronto and Vancouver saw declines. Toronto had the steepest drop across all housing as investor and buyer demand weakened, leading to a broad-based slowdown in construction.
5. Neighbourhood Home Prices & Market Fluctuations
Location is another major factor, with homes in desirable neighbourhoods or close to desirable amenities (like schools, shopping centres, and public transportation) fetching higher prices. This can be attributed to the bid rent theory, which states that prices tend to be higher in city centres and lower farther from the downtown core.
Recently, this pattern shifted during the pandemic, when many could work remotely and desired more living space as they spent more time at home. These homebuyers traded convenience for larger homes, bigger yards and suburban or small-town living. This shift in real estate prices in major urban centres saw a dramatic drop, while prices in the suburbs and smaller towns surrounding these urban areas rose, narrowing the price gap.
Frequently Asked Questions
Will home prices go up in 2026?
Home prices in Canada are expected to trend higher in 2026, though gains are likely to be modest and vary by region. Demand remains supported by population growth and limited housing supply in some markets. As a result, prices are more likely to rise gradually with stronger growth in more affordable markets and slower gains or modest declines in higher-priced regions.
What factors are affecting home prices in Canada?
Home prices in Canada are influenced by a combination of interest rates, housing supply, population growth, and broader economic conditions. Limited inventory and insufficient new construction continue to support prices. Mortgage qualification rules also play an important role in shaping demand and regional price growth.
Why is new construction influencing home prices?
New construction influences home prices since it determines how quickly the housing supply can respond to demand. In Canada, building activity has improved but still falls short of keeping up with population growth, leaving inventory tight. Higher construction costs, labour shortages, and slower project delivery mean fewer completed homes reach the market, limiting buyers’ choice and keeping upward pressure on prices.
Final Thoughts
The housing market can be complex and tricky to navigate, experiencing many ups and downs in recent years. Homeowners and prospective homebuyers should closely monitor housing trends and the factors that influence demand and prices when assessing their options. Home prices are likely to continue rising gradually, driven now by supply shortages rather than speculation.
If you’re ready to become a homeowner and want to avoid the spring seasonal rush, contact nesto mortgage experts today to move forward with your homeownership goals.
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