CREA predicts Canada’s average annual home price for this year will reach $688,955.Isabella Falsetti/The Globe and Mail
Canada’s national real estate association has downgraded its sales and price forecast for the year, as turmoil in the Middle East and higher mortgage rates weigh on prospective buyers.
The Canadian Real Estate Association is forecasting 474,972 home sales this year, which would be 1 per cent higher than 2025. In a January forecast, CREA predicted sales would climb 5.1 per cent in 2026.
The main reason for the downgrade is an increase in mortgage rates. The economic and oil shock caused by the U.S.-Israeli war with Iran has increased the likelihood that Canada’s central bank will raise interest rates. It has also pushed up the cost of funding fixed-rate mortgages.
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“Higher mortgage rates are expected to curtail activity on their own,” CREA said in a Thursday news release announcing the downgrade.
The association also said that many buyers are waiting for mortgage rates to go back down, based on expectations that the spike in oil prices may be short-lived.
Shaun Cathcart, CREA’s senior economist, called this forecast the best-case scenario.
If the war drags on and the higher oil prices affect other parts of the economy, mortgage rates would stay high and sap buyer confidence.
Mr. Cathcart said if conditions don’t start to improve, CREA would have to downgrade its sales forecast yet again.
CREA predicts Canada’s average annual home price for this year will reach $688,955, a 1.5-per-cent increase over 2025. Its previous forecast said this year’s average price would be 2.8 per cent higher than 2025.
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Until the war started in February, realtors believed 2026 would be the year that first-time homebuyers would start to make purchases. Sales have been slow for about four years.
Transactions in March declined by 0.1 per cent compared with February, with sales down in several larger markets such as Vancouver, Edmonton and Calgary. Those declines offset an uptick in sales in the Toronto region.
The national home price index, which adjusts for expensive transactions, declined 0.4 per cent on a monthly basis to $659,100 in March. Compared with a year ago, the typical home price across the country is 4.6 per cent lower.