What's Driving Canada's Housing Market in 2026?

Spring is traditionally the busiest season for real estate. Many homeowners list their properties to take advantage of warmer weather and an increase in buyer activity, as people often want to move and settle before the next fall buying season. Sellers frequently hope to be settled in time for the holidays, and buyers typically find more options and competition during this period.

Is now a good time to buy or sell your home?

There is no single answer—the right decision depends on your personal circumstances and local market conditions. It’s also worth noting that March has proven unpredictable for Canadian real estate in recent years, with major events affecting the market dramatically:

March 2020: COVID-19 lockdowns began, abruptly changing market dynamics nationwide.
March 2021: The Canadian Real Estate Association (CREA) released forecasts that were quickly outpaced by actual price moves later that spring.
March 2022: After a February peak, home prices and sales fell as the Bank of Canada (BoC) started raising its benchmark rate—demonstrating how sensitive the market is to monetary policy shifts.

Where is Canada’s housing market headed in 2023?

Forecasting the housing market remains difficult. As of March 2023, several key forces are shaping outcomes for prices, sales and rental markets. Below are seven factors to watch closely.

1. The Bank of Canada’s benchmark rate

The BoC’s policy rate is a primary driver of mortgage borrowing costs. After a series of rate hikes that pushed the key rate much higher over the previous year, the Bank paused in early March. That pause offered relief to people with variable-rate mortgages and those shopping for new financing. However, developments abroad, including turmoil in the U.S. banking sector, pushed government bond yields lower and led markets to price in the possibility of rate cuts later in the year. This back-and-forth emphasizes how global events and central bank decisions can quickly shift mortgage rate expectations.

2. Inflation

Inflation has moderated from its recent highs, and a slower annual rate suggests rate hikes may be taking effect. Yet certain costs—such as food—remain elevated, and some economists continue to debate how fast inflation can return to the BoC’s 2% target. If inflation surprises to the upside, the BoC might resume tightening, which would keep mortgage rates higher and could further pressure home prices.

3. Mortgage rates

Mortgage pricing has been volatile. For a time, variable rates tied to the BoC’s benchmark were above some fixed five-year offers, an unusual inversion driven by bond market moves. Fixed rates trended lower early in the year after bond yields fell, but market turbulence has made rates unpredictable. Higher borrowing costs reduce mortgage affordability and limit how much buyers can bid, so sustained elevated rates could keep home prices under pressure until affordability improves.

4. Housing supply

Supply remains a crucial factor. One reason prices surged earlier in the pandemic was that demand outstripped available listings. At the end of February, supply measured roughly 4.1 months of inventory—below the long-term average—indicating listings are still relatively tight. If more sellers come to market in spring, increased inventory could ease price pressure; conversely, limited new listings have already sparked renewed competition and bidding in some major urban markets.

5. Housing starts and construction

Governments at all levels have emphasized accelerating housing construction to address shortages. The Canada Mortgage and Housing Corporation has estimated that millions of additional homes will be needed to restore affordability over the coming decade. Rising interest rates make financing new construction more expensive for developers, which complicates efforts to ramp up building quickly. Recent monthly data showed some recovery in housing starts after a dip, but achieving the scale of new supply policymakers envision will be challenging while borrowing costs remain elevated.

6. Rents

Rents have climbed substantially in many Canadian cities, with advertised rents approaching or exceeding previous highs in urban cores. High rental costs create dual pressures: they increase the incentive for renters to consider buying as an alternative, which supports housing demand, while also making it harder for renters to save for down payments. In short, elevated rents can fuel housing demand even as they complicate buyers’ path to ownership.

7. Immigration

The federal government has signalled plans to raise immigration levels, with hundreds of thousands of newcomers expected over the next few years. Strong immigration inflows will add to housing demand and rental pressure, particularly in large metropolitan areas. Analysts have noted that significantly higher construction levels would be required to offset the upward price pressure from increased population growth.

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Planning a spring move? Bookmark these articles

Even though the future is uncertain, you can still plan. If you’re thinking about moving, the following guides will help you weigh whether to buy, rent or stay put. They cover mortgage options, affordability calculations, first-time buyer programs and other practical steps to prepare for a real estate decision in the months ahead.

If you enjoyed the 2022 “Where to Buy Real Estate in Canada” feature, note that the 2023 edition is scheduled to launch this spring and will offer updated insights for prospective buyers and investors.

What’s Driving Canada’s Housing Market in 2026?