Canada’s housing market faltered in September 2026 as national sales dropped 7.7 per cent year-over-year. The Canadian Real Estate Association downgraded its annual sales forecast for the third quarter, pointing to rising borrowing costs and mounting economic uncertainty as buyers retreated to the sidelines.
Canadian home sales slid across the board in September 2026, dealing a sharp setback to what had been a stabilizing real estate sector over the summer. Transaction volumes dropped 2.3 per cent month-over-month on a seasonally adjusted basis, following a 0.7 per cent decline in August according to trade data compiled by Reuters. The annual comparison proved even starker, with national home sales down 7.7 per cent compared with September 2025.
The downturn prompted the Canadian Real Estate Association to revise down its annual projection for 2026 for the third straight quarter. The national industry group now expects 444,530 homes to change hands by year’s end—representing a 5.2 per cent decrease from 2025 totals. That adjustment marks a steep retreat from earlier optimism that anticipated market growth.
Fixed Mortgage Rate Surges and Bank of Canada Speculation Stall Buyers
Behind the sudden market slowdown lies a potent mix of climbing borrowing costs and shifting monetary policy expectations.
At the same time, persistent inflation risks and a weaker Canadian dollar have pushed money markets to price in a 25-basis-point interest rate hike by the Bank of Canada before the end of the year. Economists noted that the central bank has adopted a notably more hawkish tone in response to ongoing economic headwinds and trade tensions with the United States.
After a four-month run of modestly positive progress on demand, supply, and prices, many of Canada’s housing markets took a step back in September. This was hardly surprising given the latest jump in fixed mortgage rates, and with the Bank of Canada now widely expected to follow with a rate hike before the end of the year.
The association’s senior economist emphasized that affordability remains severely strained across major markets. With buyers facing both higher borrowing expenses and new questions over future central bank moves, market participation withered.
With housing affordability already stretched, the big question going forward is how much farther will the bank have to go to keep a lid on inflation next year? Until that becomes clearer, this fresh round of uncertainty will likely send some buyers back to the sidelines.
National Home Prices and Regional Variations in British Columbia and New Brunswick
As demand cooled, home prices mirrored the downward pressure. The national average sale price fell to $666,538 in September 2026, down 1.6 per cent compared with the same month a year earlier. Meanwhile, CREA’s home price index—designed to track typical residential properties—edged 0.4 per cent lower from August and dropped 3.4 per cent year-over-year.
Regional markets felt the chill unevenly. The average Multiple Listing Service price in B.C. slid 2.4 per cent to just above $924,000.
Across New Brunswick, the real estate sector registered its slowest September since 2018. Provincial inventory climbed as new listings ran well above historical averages, yet prospective buyers resisted climbing price tags. Fredericton recorded an average sale price of $384,586, Saint John hit $373,302, and Moncton reached $367,626.
Projected 2027 Rebound Contingent on Interest Rate Stabilization
Despite the autumn contraction, industry forecasts point toward a recovery once borrowing conditions find firm footing. CREA projects that national home sales will improve by 4.4 per cent in 2027, reaching a total of 464,235 transactions. That anticipated rebound relies on slow economic expansion, renewed population growth, and greater certainty from the central bank regarding the future path of interest rates.
The national average home price is expected to tick 0.2 per cent higher on an annual basis to $681,681 for the entirety of 2026, before rising another 1.2 per cent next year to $689,909.
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