Rising mortgage rates are starting to drive down expectations around the performance of Canada’s real estate market this year.
That’s according to a report released by the Canadian Real Estate Association today, which downgraded its sales volume forecast for 2026. It only expects a 1-per-cent increase in transactions this year compared with 2025. Earlier in the year, CREA was expecting a 5.1-per-cent increase.
The conflict in the Middle East and its impact on mortgage rates is the main reason for the downgrade. The war has created a major shock in the price of oil, which in turn increased expectations of interest rate hikes from the Bank of Canada this year. Fixed-rate mortgage rates have already shot up by around half a percentage point.
Meanwhile, a survey from Chartered Professional Accountants of Canada noted that 61 per cent of people hoping to move are waiting for better market conditions, and 46 per cent of respondents said that home ownership is becoming increasingly difficult to achieve.
CPA Canada chief economist David-Alexandre Brassard noted that CREA report’s showed sales dropped by 0.1 per cent between February and March and that the first quarter of 2026 was the weakest for the Canadian housing market in three years.
“Another month without sales growth and prices continuing to drop tells us the stalemate in the housing market continues,” Mr. Brassard said in a release.
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