Canadian Home Prices Seen Slipping in 2026 Before Modest Recovery Next Year, TD Says

At mid-year, Canadian housing markets are broadly in line with expectations and average home prices are still seen slipping about 0.3% in 2026, with subdued gains in the second half of the year followed by a modest recovery in 2027, said TD. Sales were downgraded after a weak first quarter, but the second quarter is tracking in line, with momentum expected to improve into the last six months of this year on pent-up demand and easing bond yields, wrote the bank in a note published on Friday. However, activity is likely to remain below pre-pandemic levels until the second half of 2027, constrained by weak population growth and soft labor markets, pointed out TD. Regionally, conditions remain uneven, wrote Rishi Sondhi and Matt Palucci in the note. British Columbia and Ontario are expected to see firmer sales in the second half of this year on pent-up demand and improving affordability, though levels stay subdued. In Quebec, easing supply constraints and a weaker economic backdrop are cooling momentum, with sales set to stagnate and price growth slowing below 3% next year. Alberta is normalizing after strong gains, with elevated supply keeping price growth modest this year.