Canada’s housing market appears to be entering a phase of measured adjustment, impacted by regional supply-demand balances, interest rate shifts, and broader economic momentum. According to RBC’s August 2025 housing market forecast update, while challenges persist, there are signs of stabilization and potential recovery on the horizon.
Certain indicators point to an environment where conditions could gradually normalize through 2026. However, there is likely to be regional variability, as some areas face persistent price pressure, while others are showing signs of steadier demand and firmer values.
Transaction Trends and Market Activity
RBC’s latest national forecast suggests 2025 will end with roughly 467,000 home resales, a decline from last year and still below the pre-pandemic average of just over half a million transactions annually. The early months of the year were marked by hesitant buyers and slower deal flow, particularly in Ontario and British Columbia, where high prices and elevated inventory made for more competitive selling conditions.
However, the report also noted that as the Bank of Canada’s rate cuts began to take effect in mid-2024 and into 2025, demand in some areas improved modestly. In RBC’s outlook, the expectation is for demand to gradually recover starting in the latter half of 2025. Looking ahead, it projects a rebound in activity to roughly 504,000 transactions in 2026, although this would not be a return to pre-2020 norms.
Price Movements and Regional Variations
National benchmark prices are forecast to edge higher by about 0.7% this year, although this improvement is not expected to be consistent across all markets. Those with persistent supply surpluses, such as Ontario’s Greater Golden Horseshoe and parts of British Columbia’s Lower Mainland, face the likelihood of additional price softening over the coming months, as sellers in these areas are contending with longer listing times and more frequent price adjustments.
In contrast, the Prairie provinces, Quebec, and much of Atlantic Canada are seeing more balanced conditions, where steady demand is keeping prices from slipping and, in some cases, allowing for modest gains. These regions also benefit from comparatively lower entry costs, which have made them less sensitive to the affordability pressures affecting higher-priced markets.
Economic Context and Policy Influences
The Bank of Canada’s interest rate reductions have begun to filter through to mortgage costs, offering some relief after years of tightening. The broader economy is also expected to pick up pace in late 2025, with unemployment anticipated to peak at about 7.1% before trending down in 2026.
However, affordability remains strained in many major urban centres. Even with lower borrowing costs, elevated price levels and household debt burdens are keeping a cap on how quickly demand can recover. RBC also notes that government policy, from housing supply initiatives to population growth targets, continues to be a wildcard that could either accelerate or temper market adjustment.
Outlook for 2026 and Beyond
The forecast into 2026 points toward gradual improvement in national transaction volumes and a more stable price environment in many regions. Gains are expected to be uneven, with smaller, more affordable markets potentially outpacing the country’s largest urban hubs in both sales growth and price resilience.
While no rapid upswing appears likely, the alignment of lower interest rates, steadier employment prospects, and more balanced supply conditions in parts of the country could create a foundation for modest growth. Conversely, areas where inventory remains elevated will continue to see slower recoveries and more pressure on pricing.
Canada’s housing market is navigating a reset that prioritizes stability over rapid expansion. This period of adjustment is reshaping regional dynamics, with splitting directions for high-priced, inventory-heavy centres compared to more moderately priced, balanced markets. The pace of recovery will depend on how quickly affordability improves and whether economic gains take hold as projected. For those watching the market closely, the coming year will be less about chasing momentum and more about observing where sustainable demand begins to re-emerge.
The full report can be found in RBC’s Special Housing Reports.