TD slashes housing market forecast for 2026, now sees sales and prices falling

TD economics does not expect home sales and prices to rise this year.

TD Economics has severely lowered its 2026 forecast for home sales and prices, saying it no longer expects either to rise this year, after weak performances over the past two quarters.

It now expects sales to fall 1.8 per cent year-over-year, on average, and home prices to move 0.3 per cent lower nationally.

As of December, TD had forecasted a 9.3 per cent year-over-year gain in home sales for 2026 as well as a 4.1 per cent increase in average home prices.

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Economist Rishi Sondhi said housing activity will likely take most of the year to recoup first-quarter losses, as sales remain constrained by a subdued economy, heightened uncertainty and ongoing cost of living pressures.

“While severe weather in Central and Atlantic Canada weighed on activity early in the year, weakness was also evident in B.C., where conditions were more temperate,” he said in a report.

The report gave Ontario and B.C. the sharpest downgrades to sales and prices after “significant” first-quarter declines, as potential buyers in those provinces still face significant affordability challenges and are likely waiting for the market to bottom out.

In its previous projections, TD expected home sales in Ontario and B.C. to rise 13 per cent and 15.1 per cent, respectively. Ontario is now expected to see 3.2 per cent fewer transactions, while activity in B.C. is forecast to tick 0.2 per cent lower.

Prices are expected to fall four per cent in Ontario, compared with December’s forecast of a 0.6 per cent gain, and decline 1.2 per cent in B.C., compared with the previously expected 3.6 per cent rise.

Sondhi said pent-up demand “has yet to re-emerge as quickly as previously expected” in those provinces, suggesting further price declines may be needed to spur activity.

He cautions there are risks to the outlook, such as a broader or more prolonged escalation of Middle East tensions which could “support activity in oil producing regions but weigh more heavily on oil importers.” That could potentially unleash pent up demand in Ontario and B.C. “faster or more forcefully than expected,” said Sondhi.

He added that upcoming CUSMA negotiations also loom large for the broader economy and the housing market.

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The report forecasts a rebound for Canadian home sales in 2027 following improved economic and job market conditions, which could lead to growth in the national average price.

TD currently expects home sales to jump 9.6 per cent year-over-year in 2027, with average prices increasing 2.7 per cent.

This report by The Canadian Press was first published March 26, 2026.