CREA Downgrades Canada Home Sales, Price Forecasts

The primary reason for the downgrade is an increase in mortgage rates, driven by the economic and oil shock from the U.S.-Israeli war with Iran, which increases the likelihood of Bank of Canada interest rate hikes and higher fixed-rate mortgage costs. CREA states that many buyers are waiting for mortgage rates to go back down, based on expectations that the spike in oil prices will be short-lived.

Shaun Cathcart, CREA’s senior economist, calls this forecast the best-case scenario, warning that if the war persists and higher oil prices affect other parts of the economy, mortgage rates will stay high, necessitating another downgrade. Realtors believed 2026 would be the year first-time homebuyers would start making purchases, following four years of slow sales, until the war began in February.

Transactions in March declined by 0.1% compared with February, with sales down in Vancouver, Edmonton, and Calgary, offsetting an uptick in the Toronto region. The national home price index declined 0.4% on a monthly basis to $659,100 in March, and is 4.6% lower compared with a year ago.