Buying a House in 2026? Here’s What to Expect

2025 was the year that should have been for the Canadian housing market.

Falling interest rates were meant to unleash a flood of pent up demand, but widespread economic uncertainty and strained household finances conspired to hold the dam in place.

Will 2026 be any different?

There are reasons to believe that more home buyers will brave the market in 2026. If you’re one of them — and enough pieces fall into place — don’t be surprised if you run into increased competition and firmer prices.

There’s no housing boom in sight, so expect 2026 to be a year of gradual shifting; not a different story, just an updated draft with a little more action pencilled in. These are the subplots that could dictate where you buy and how much you spend.

Major markets, minor improvements

The Canadian Real Estate Association expects home sales in 2026 to increase by 7.7% versus 2025’s projected totals.

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That would result in the best year for sales since 2021.

That sounds pretty exciting, but it requires a little context: 71% of the increase is projected to take place in British Columbia and Ontario, where prices softened the most in 2025.

Enthusiasm around next year’s potential uptick is muted. Shaun Cathcart, senior economist for the Canadian Real Estate Association, says the improved sales will be more a function of a low starting point than buyer fervour.

“I would describe that as climbing from the sub-basement into the basement,” he says.

Outside B.C. and Ontario, no province is slated for a double-digit sales gain. (PEI leads the way with an expected increase of 7.9%, which amounts to about 70 additional transactions.)

Notably, the country’s hottest markets in 2025 — Newfoundland and Quebec — are expected to see sales fall by at least half in 2026 as exuberance fades and exhaustion sets in.

Phil Soper, CEO of Royal LePage, doesn’t see the increased sales activity having much of an impact on prices.

“If you look at the last 75 years, home prices in Canada have risen about 5% per year. We're going to be well below that,” he says. “We've got much higher inventory levels than we typically do coming out of a correction.”

Soper expects prices to rise faster in Canada’s most affordable regions: Regina, Saskatoon, Edmonton, Winnipeg and Quebec City, with Atlantic Canada outperforming the rest of the country.

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What will feed — and bleed — demand?

For home sales to improve, demand needs to intensify. That’s not a given when you consider the many factors that shape buyer appetites.

We’ve broken them into two categories — those expected to stimulate demand (feeders) and those that could eat into it (bleeders) — to try and understand just how competitive the 2026 housing market might be.

Feeder: Improving buyer mentality

Much of the damage done to consumer confidence in 2025 was due to a trade war that felt impossible not that long ago. Donald Trump’s tariff offensive didn’t decimate the economy, but it cast enough of a cloud to make Canadians question major purchases.

Soper believes home buyers won’t be as deterred by the trade war in 2026.

“Peoople are just getting used to the Trump administration's bombastic approach to trade and international relations, and they're tuning it out,” he says.

An acceptance of the status quo might be all that’s needed to finally prod buyers from the sidelines.

“The thing is, there's so much pent-up demand out there that even if you take half of it out you could still have a more active housing market next year than we had this year,” Cathcart says.

Bleeder: Population decline

In the third quarter of 2025, Canada’s population fell by 0.2% — about 76,000 people — due to a decrease in non-permanent residents. The flow of immigrants into the country during Q3 was down more than 17% year-over-year, and was the largest decrease in over 50 years of record keeping.

Canada’s population is expected to continue moderating in 2026. The government’s target for new temporary arrivals is set at 385,000 for next year, which includes a 49% reduction in the number of new student arrivals and a 37% cut to the number of new temporary workers compared to 2025.

Since fewer new arrivals means fewer new renters, Soper sees the decrease dampening investor interest, particularly in the condo market.

Cathcart feels the impact will be broader, and more geographical in nature. He sees smaller provinces whose markets were buoyed by strong population growth — like those on the Prairies and the East Coast — being hit hardest by weakening immigration.

“That's who's really going to get hammered because that was really the thing that was holding those markets up,” he says.

Feeder: Mortgage rates

If they stay at their late-December levels, mortgage rates could stimulate demand. Rates aren’t especially juicy, but they might not get any lower in 2026.

When announcing its most recent overnight rate cut on October 30, the Bank of Canada signaled that its policy rate was “at about the right level” to both stimulate the economy and limit inflation.

“I think that was the green light a lot of [homebuyers] have been sort of waiting for,” Cathcart says. “It's like, ‘Alright, this is about as good as we're going to get, so now's the time to lock in.’”

If the Bank of Canada maintains its overnight rate for most of 2026, that means a year of 3.5% variable rates. That’ll be hard to resist for some buyers, especially if fixed rates tick up.

Government bond yields, which influence fixed rates, reached a five-month high on December 9. If home buyers receive the message that fixed rates are on the rise, they may rush to get pre-approved while rates under 4% are still available. That could boost activity in the first few months of 2025.

Feeder and/or bleeder: Affordability

Whether buying a house gets more affordable in 2026 depends on the metrics you use as a guideline.

According to Soper, prices have been softening ever since hitting their pandemic-era peak in 2022. Toss in lower mortgage rates and above-average wage growth for young Canadians over the past several years and he says buyers have access to a rare, extended window of opportunity.

“[2026] will be the fourth year in a row where we'll have improving affordability,” Soper says. “You have to go back into the early 90s before you find a period of time longer than months where affordability was improving in this country.”

But this affordability advantage could be limited in scope.

According to CREA’s MLS Home Price Index benchmark price, the Association’s preferred metric for tracking price movement, prices have fallen in only a fraction of markets in the past three years: three are in B.C., the rest are in Ontario.

There’s also a household finance piece to the affordability puzzle. In the current economic climate, Canadians are struggling to save and missing debt payments.

In October, 40% of Canadians reported being within $200 of not being able to pay their monthly bills, according to MNP’s Consumer Debt Index. In the third quarter of 2025, Equifax found that long-term credit delinquencies increased significantly, particularly among younger Canadians.

Being approved for a sufficient mortgage will be a struggle, if not an impossibility, for members of these cash-strapped cohorts.

“If you go three, four payments into what we call severe delinquency levels, it's more of a stronger indication of continued financial stress,” says Rebecca Oakes, vice president of advanced analytics at Equifax Canada. “It might take longer for your score to recover, and lenders are likely to see that a little bit more negatively.”

Soper doubts that these individual affordability struggles will hold back home sales in 2026.

“I don't buy that. What the math shows is that millennials and Generation Z are considerably better off when you look at their salaries relative to the cost of living,” he says.

“The affordability hurdle, I believe, is more psychological and marketing-related than it is structural.”

What this all means for you, gentle home buyer

2026 is likely to be another fractured year for Canadian housing. Focus on where you intend to buy rather than getting swept up in national narratives.

The most restrained markets in 2025, B.C. and Ontario, may have bottomed out, so expect slightly higher competition and firmer prices once the spring market arrives. That’s if you’re seeking a detached home, semi or townhouse. The condo market will remain soft as warm cheese, and may melt down even further now that population growth has reversed course.

Elsewhere, you’ll be dealing with markets that saw prices rise and inventory fall for much of 2025. Bargains will be few and far between. You may want to talk to your real estate agent about bidding war strategies, just in case.

Wherever your home buying journey takes you in 2026, remember these three things: