Housing

Home sales slip 2.3% in September as CREA cuts its 2026 forecast for a third time

Higher fixed mortgage rates cooled resale activity; CREA now expects 444,530 sales this year, down 5.2%, while the national benchmark price is 3.4% lower than a year ago.

By John Wilson · October 16, 2026

Canada's resale housing market lost momentum in September. The Canadian Real Estate Association (CREA) reported on Friday, October 16, that national home sales fell 2.3% from August and were down 7.7% from September 2025, ending four months of modest gains.

At the same time, CREA lowered its sales forecast for 2026 for the third time this year, blaming the recent jump in fixed mortgage rates.

The numbers

CREA now projects 444,530 home sales in 2026, a 5.2% decline from 2025, compared with a 1.4% decline it forecast in July. It expects the national average price to edge up 0.2% to $681,681 this year, and sales to recover 4.4% to 464,235 in 2027, according to The Canadian Press.

Sales: down 2.3% month over month; actual sales down 7.7% year over year
New listings: down 1.8% from August
Sales-to-new listings ratio: 48.8%, down from 49.1%
Months of inventory: 4.9 nationally
MLS Home Price Index: down 0.4% from August and 3.4% from a year earlier
National average sale price: $666,538, down 1.6% year over year

Why buyers stepped back

"This was hardly surprising given the latest jump in fixed mortgage rates," said Shaun Cathcart, CREA's senior economist. "The big question going forward is how much farther will the (Bank of Canada) have to go." TD economist Rishi Sondhi agreed that the rise in borrowing costs was probably the prime force behind the monthly decline.

Fixed mortgage rates follow bond yields, which have risen as markets priced in possible rate hikes from both the Bank of Canada and the U.S. Federal Reserve. The weak September jobs report has since tempered expectations for an October hike.

Construction tells a different story

New construction held up better. Canada Mortgage and Housing Corporation (CMHC) reported the same day that the seasonally adjusted annual pace of housing starts rose 3% to 248,896 units in September, from 242,223 in August. Still, actual starts in larger centres were down 11% from a year earlier, and CMHC deputy chief economist Aled ab Iorwerth warned that "a key risk for Canada now is not building enough during this period of softening housing markets across the country."

The other side

For buyers, softer conditions bring some leverage. With 4.9 months of inventory and prices below year-ago levels, negotiating power has shifted somewhat. "For sellers, a well thought out pricing strategy will become even more important," said CREA chair Garry Bhaura. Conditions vary sharply by region, however, and CREA expects activity to pick up again in 2027.

What it means for Canadian households

For would-be buyers, the main variable is borrowing cost rather than price. Getting a pre-approval to lock in a rate, and testing a budget against the mortgage stress test, can help avoid surprises if rates rise further.

For homeowners renewing in the coming months, it is worth shopping lenders and comparing terms well before the maturity date. This is general information, not personalized advice.

Sources

General news and information, not individualized financial advice. Figures reflect the publication date.