Canada's housing market has faced a significant shift in expectations, leading one of the nation's major financial institutions to downgrade its outlook for the remainder of the year. TD Economics released a revised housing market forecast at the end of March, updating its original predictions made in December 2025. This adjustment comes in response to weaker-than-anticipated sales and price growth over the past six months, specifically from the last quarter of 2025 through the first quarter of 2026.
Revised Forecast Details
The new outlook from TD indicates a notable decline in sales activity. For the first quarter of 2026, sales are projected to fall by seven percent compared to the final quarter of 2025. This marks a stark contrast to the bank's initial forecast, which had anticipated a slight increase of nearly two percent. However, a rebound is expected in the second quarter, with sales predicted to grow by five percent quarter-over-quarter, up from the earlier estimate of two percent. The second quarter traditionally represents the busiest period for real estate transactions, contrasting sharply with the slower activity typically seen in other parts of the year.
Regional Variations and Challenges
The report highlights that Ontario and British Columbia have experienced the most substantial downgrades in both sales and price growth. These provinces saw the largest drop-off in market activity during the first three months of 2026. Key obstacles continue to plague the national housing market, with affordability remaining a primary headwind. Despite prices having declined from their peaks over three years ago, many potential buyers still find it difficult to enter the market. Additionally, falling migration rates and slower population growth have further dampened demand, exacerbating the market's struggles.
Bright Spots in Prairie Provinces
In contrast to the challenges faced in other regions, TD predicts that Alberta, Saskatchewan, and Manitoba will emerge as leaders in price growth. This optimistic outlook is largely attributed to rising oil prices, which are expected to positively impact job markets in these provinces. As economic conditions improve, housing demand in these areas is likely to strengthen, supporting more robust price increases compared to the national average.
Overall, the revised forecast underscores the ongoing volatility and regional disparities within Canada's housing market. While some areas face significant headwinds, others may benefit from economic tailwinds, highlighting the complex dynamics at play in the real estate sector.
