Gradual market recovery and modest price gains expected, TD Economics said
Canadian home sales are set for a slower recovery than previously forecast, with TD Economics downgrading its outlook for quarterly sales growth in late 2025 and much of 2026.
The revision, led by Rishi Sondhi, economist at TD Bank, points to a “gradual, modest recovery in the housing market,” shaped by only modest interest-rate relief and the continued return of pent-up demand.
“In 2026, an improving Canadian jobs market should support activity,” Sondhi said.
Stronger-than-expected Q3 sales, especially in British Columbia and Ontario, revealed the extent of pent-up demand that returned to the market after a period of uncertainty. However, this surge means “go-forward gains don’t have to be as firm to still be in line with demographically supported sales levels.”
As a result, TD Economics has trimmed its sales growth expectations for the quarters ahead.
Price growth diverges by region
National average home price growth also outperformed expectations in the third quarter, largely due to strong sales in higher-priced markets and the outperformance of expensive properties within those regions.
“We assume these so-called ‘compositional forces’ will sustain into the end of 2025 and have upgraded our near-term Canadian average home price forecast accordingly,” Sondhi said.
For 2026, however, the forecast calls for a slight cooling, with a projected 5% price advance, still consistent with a balanced national market.
Regional dynamics remain highly varied. Saskatchewan led the country with annual price growth exceeding 10% in half of 2025’s first eight months, buoyed by strong job gains and tight supply. Manitoba also saw solid price gains, though these are expected to moderate as job growth slows next year.
In contrast, Alberta’s market shifted from ultra-tight to balanced, with sales dropping and listings rising above long-term averages. “Some ebbing in price pressures is likely welcomed given that they were advancing at double-digit annual rates as recently as late-2024,” Sondhi said.
Jordan Nanowski, CMHC’s lead economist for Toronto, says the city’s condo market won’t find its footing until at least 2028—new sales are down 59% YoY and both prices and rents continue to slide.https://t.co/dEL00kd4mB
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 26, 2025
B.C. and Ontario: Buyers’ markets persist
B.C. and Ontario remain the weakest markets, with prices likely to decline this year and buyers enjoying more choice and bargaining power. The GTA condo segment, in particular, continues to see elevated listings and further price concessions are likely before balance is restored.
“Pandemic-era price gains in the GTA condo market have all but evaporated,” Sondhi said.
Risks to the outlook include the potential for weaker-than-expected near-term sales if households pause after Q3’s activity, and the impact of mortgage renewals on supply if investors struggle with higher rates. The upcoming Canada-United States-Mexico Agreement (CUSMA) negotiations could also add economic uncertainty.
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