TD Slashes 2026 Housing Forecast: From Expecting +9.3% Sales Growth to -1.8%, What Changed

TD Economics has dramatically revised down its 2026 Canadian housing market forecast, slashing its sales growth projection from a previously expected 9.3 per cent increase to an anticipated 1.8 per cent decline, and downgrading its price forecast from a projected 4.1 per cent rise to a mere 0.3 per cent drop nationally. The stark revision, published in March 2026, signals that the pent-up demand many analysts had counted on is taking much longer to materialize than expected.

The Dramatic Downgrade

In December, TD had forecast a robust recovery for 2026, projecting home sales to jump 9.3 per cent year-over-year and average prices to rise 4.1 per cent. Those projections were based on the assumption that suppressed buyer demand—held back by high interest rates, affordability constraints, and trade uncertainty—would finally pent-up energy in the spring of 2026.

The March revision tells a very different story. After weak performance in the first two quarters of 2026, TD now expects national home sales to fall 1.8 per cent on average and prices to edge down 0.3 per cent. The shift represents one of the most significant forecast reversals in recent Canadian housing market analysis.

“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,” said TD economist Rishi Sondhi. “Pent-up demand has yet to re-emerge as quickly as previously expected,” he added, suggesting further price declines may be needed to spur activity.

Ontario and B.C. Hit Hardest

The downgrade was most severe for Ontario and British Columbia, the two provinces that had been expected to lead any recovery. TD now expects Ontario transactions to fall 3.2 per cent year-over-year, compared to its December forecast of a 13 per cent increase. In B.C., activity is now projected to dip 0.2 per cent lower, versus a previously expected 15.1 per cent gain.

On the price side, TD cut its Ontario forecast from a projected 0.6 per cent gain to an expected 4 per cent decline. For B.C., the forecast shifted from a 3.6 per cent price increase to a 1.2 per cent drop.

Sondhi attributed the weakness in these provinces to persistent affordability challenges that are keeping potential buyers on the sidelines, waiting for the market to bottom out. “Potential buyers in those provinces still face significant affordability challenges and are likely waiting for the market to bottom out,” he noted.

The Tariff Overhang

A key factor weighing on the revised forecast is the ongoing Canada-U.S. trade war. U.S. tariffs imposed on Canadian steel, aluminum, lumber, autos and automotive parts have dented the economy and job market, particularly in manufacturing-heavy regions. This has created a cloud of uncertainty over employment that makes many Canadians hesitant to make the largest purchase of their lives.

The upcoming CUSMA (Canada-United States-Mexico Agreement) negotiations later this year loom large for the broader economy and housing market. TD noted that the outcome of these negotiations could either accelerate or delay the return of pent-up housing demand.

The 2027 Rebound

Despite the bleak 2026 outlook, TD maintains its forecast for a meaningful recovery in 2027. Home sales are projected to jump 9.6 per cent year-over-year in 2027, with average prices increasing 2.7 per cent. The rebound is expected to be driven by improved economic and job market conditions that boost consumer confidence and make people more willing to buy.

“It will likely take most of the year for housing activity to recover from first-quarter losses,” Sondhi said, emphasizing that sales remain constrained by a subdued economy, heightened uncertainty and ongoing cost-of-living pressures.

What This Means for the Market

The TD forecast revision has significant implications for how buyers, sellers, and investors approach the Canadian housing market in 2026. For buyers, the continued price softness and higher inventory mean more negotiating power, but also signal that prices may fall further before the market stabilizes.

For sellers, the revised forecast means that waiting for a strong spring or summer market may not pay off in 2026. The recovery that many had hoped for has been pushed to 2027, meaning those who need to sell should price their properties realistically rather than holding out for higher valuations.

The forecast also highlights the deepening divergence between Canada’s housing markets. While national averages tell a modest story, Ontario and B.C.—which together account for the majority of Canadian housing activity—are experiencing significantly worse conditions than the rest of the country. This regional divergence is likely to intensify in 2026 as affordability challenges remain most acute in the two largest markets.