Mortgage Rate Surge Threatens Spring Housing Market Revival, CREA Warns
The Canadian Real Estate Association (CREA) has issued a stark warning that a recent spike in mortgage rates could significantly dampen the spring housing market, traditionally the busiest season for homebuying activity across Canada.
Forecast Downgrade Amid Changing Conditions
On Thursday, CREA revised its 2026 housing market forecast downward from January estimates, citing a critical shift in buying conditions. The association pointed to an oil price shock triggered by geopolitical conflicts, which led directly to increased mortgage rates in March. This development comes after a particularly slow March for housing activity.
CREA senior economist Shaun Cathcart explained that the combination of higher mortgage rates and the perception that this increase might be temporary could keep potential buyers on the sidelines during the crucial spring months of April, May, and June.
"I think it's really going to send some people back to the sidelines," Cathcart stated. "Quite frankly, I think it's going to look a lot like what tariffs did in the market last year: pull the rug out from under the spring market. And then maybe, if things improve, some of that activity shows up in the fall."
Revised Projections and Market Slowdown
In its updated forecast, CREA now expects 474,972 residential properties to change hands in 2026, representing just a one percent increase compared to 2025. This figure marks a significant reduction from the 494,512 transactions originally projected in January.
The national average home price forecast for 2026 was adjusted to $688,955, down from the $698,881 projected earlier. This represents a 1.5 percent increase from 2025 levels, with virtually no growth anticipated in British Columbia, Alberta, and Ontario, and modest gains of two to five percent expected in other provinces.
March Numbers Confirm Cooling Trend
CREA's March data already indicates a market slowdown. Cathcart noted that he had expected homebuyers to return in greater numbers this spring before the oil shock disrupted market conditions.
In March, the number of home sales recorded through CREA's Multiple Listing Service (MLS) dipped 0.1 percent month-over-month, while non-seasonally adjusted transactions declined 2.3 percent compared to the same period last year.
The number of newly listed properties also decreased by 0.2 percent month-over-month, reaching its lowest level since mid-2024.
Regional Variations and Price Declines
While the national sales-to-new-listings ratio remained at 47.8 percent—within the range typically associated with balanced market conditions—Cathcart emphasized that regional variations tell a more complex story.
"It's closer to being on the buyer's market side in Ontario and it's the cooler side in B.C., but not quite a buyer's market," he explained, noting that higher mortgage rates would "bite harder" in more expensive markets. "It's a mixed bag."
Home prices continued their downward trend in March, with the MLS Home Price Index declining 0.4 percent compared to February and dropping 4.7 percent year-over-year. The non-seasonally adjusted national average home price reached $673,084 in March, representing a 0.8 percent decrease from the same month last year.
In the Greater Toronto Area, the seasonally adjusted benchmark home price fell 7.2 percent year-over-year to $928,000, while the Greater Vancouver Area experienced a 6.8 percent decline to $1,096,300.
The combination of rising mortgage costs and buyer hesitation threatens to extend what has already been a challenging period for Canada's housing market, with spring typically representing a critical opportunity for market recovery that now appears increasingly uncertain.
