CMHC's Mid-Year Housing Update: What the New Price, Rate, and Rent Forecasts Mean for Your Next Move

What This Means for You

Canada Mortgage and Housing Corporation (CMHC) published its mid-year update to the 2026 Housing Market Outlook on July 22, and it gives Canadians something the market has been missing for months: specific numbers instead of vague sentiment. Based on our analysis of the forecast's price, rate, and rent projections through 2028, the practical takeaway is that this is not a market that is about to swing sharply in either direction — it's a market of small, uneven moves that reward Canadians who plan around the actual figures rather than the headlines. Below is what those figures mean depending on whether you're trying to buy, renew a mortgage, rent, or manage a rental property.

If You're Trying to Buy a Home:

Immediate action:

• Anchor your budget to CMHC's national average resale price forecast, not last year's number. CMHC projects the national MLS average resale price at roughly $698,000 for 2026, rising to about $705,000 in 2027 and $727,000 in 2028. That's a modest, single-digit-percentage climb over three years, not the double-digit swings of 2021-2022 — which means waiting a year for a "better deal" is unlikely to save you much if your income and rate environment stay the same.
• Check whether your target market is Ontario or British Columbia specifically, since the national number hides real regional divergence. CMHC's outlook flags average prices declining slightly in Ontario through 2026 because of elevated inventory and weak sales, particularly in the Greater Toronto Area, while British Columbia's resale market is expected to show "some recovery" in 2026 but remain below historical averages. A Toronto-area buyer has more negotiating room right now than a Vancouver-area buyer competing in a tightening market.
• Get a full mortgage stress-test pre-approval before you shop, using a rate close to CMHC's 2026 forecast rather than today's advertised teaser rate. Lenders qualify you at the greater of your contract rate plus 2% or the Bank of Canada's benchmark qualifying rate, so understanding your real ceiling now avoids a disappointing surprise once you've found a home.

What to prepare:

• Run the math on a $698,000 home at a 5.1% five-year fixed rate, which is CMHC's forecast average fixed rate for 2026. On a 25-year amortization with 20% down (a $558,400 mortgage), that works out to roughly $3,310 a month in principal and interest — before property tax, insurance, and condo fees if applicable. Compare that to what a 4.4% rate (closer to late-2024 lows) would have cost on the same mortgage: about $3,050 a month. That roughly $260-a-month gap is the real cost of "waiting for rates to come back down" — CMHC's forecast suggests they're heading modestly higher, not lower, through 2028.
• Build a two-scenario budget, since CMHC itself flags an alternative, weaker economic scenario alongside its baseline. Its baseline has real GDP growing just 0.7% in 2026; its downside scenario shows GDP contracting 0.1%. If you're buying near the edge of your affordability limit, stress-test your own budget against a job-loss or reduced-hours scenario, not just against the interest rate.

Resources:

• CMHC's Housing Market Outlook (cmhc-schl.gc.ca) for the full regional data covering 18 markets
• Financial Consumer Agency of Canada's mortgage qualifier tool (canada.ca, search "mortgage qualifier tool")
• Your provincial land title or real estate association's average-price tracker, to compare local numbers against CMHC's national figure

Example scenario: A dual-income Hamilton household earning $115,000 combined has been waiting since early 2025 for prices to "come down more" before buying a $650,000 home. Based on CMHC's forecast — modest price growth nationally, but Ontario prices flat-to-slightly-down, and fixed rates drifting from around 4.7% today toward 5.4% by 2027 — the arithmetic favours buying sooner rather than later if they're already qualified: a rate increase of even half a point on a $520,000 mortgage adds roughly $150 a month, more than offsetting any price dip Ontario's soft market might deliver.

If You're Renewing or Shopping for a Mortgage:

Immediate action:

• If your current mortgage was set five years ago, in 2021, expect a real payment jump at renewal. Five-year fixed rates in 2021 frequently landed between 1.5% and 2.5%; CMHC's 2026 forecast average is 5.1%, climbing to about 5.4% in 2027 and 5.5% in 2028. On a $450,000 remaining balance, moving from a 2% rate to 5.1% raises a 25-year-amortization payment from roughly $1,905 to about $2,650 a month — a gap worth planning for six months before your renewal date, not six weeks.
• Ask your lender for a renewal quote at least 120 days out, and separately get a quote from at least one other federally regulated lender or a mortgage broker. Since CMHC's own forecast shows fixed rates edging up through 2028 rather than down, locking in a competitive five-year rate now — rather than assuming a better rate is coming — is the more defensible move for most renewing households.
• If you have room in your budget, consider a shorter term or blended variable-fixed product if your broker can show it beats the 5.1%-5.5% fixed trajectory CMHC is forecasting, since variable rates are described in the outlook as "stable in early 2026" before likely rising again as the Bank of Canada normalizes its policy rate.

What to prepare:

• Recalculate your household budget assuming a payment 20-30% higher than your 2021-era payment, and identify now which discretionary costs would absorb that gap.
• If a renewal shortfall looks unmanageable, contact your lender proactively — federally regulated banks are required to work with borrowers facing financial hardship, and early contact gives you more options than contact after a missed payment.

If You're Renting:

Immediate action:

• Use the vacancy-rate gap to negotiate, especially in Toronto, Ottawa, and Montreal. CMHC's rental data shows 2025 vacancy rates of 3.0% in Toronto, 3.0% in Ottawa, and 2.9% in Montreal — all trending toward what CMHC now considers a more "balanced" benchmark of roughly 4% rather than the traditional 3% figure. Rising vacancy gives tenants more leverage than at any point in the past several years in those cities.
• Ask specifically about newer buildings completed after 2020. CMHC's mid-year rental update found units in newer buildings are taking longer — sometimes months — to rent out, and landlords in this segment are offering incentives including several months of free rent, discounted parking, and cash bonuses. If you're renewing or shopping for a unit, ask directly whether any incentive is available; many landlords don't advertise it upfront.
• Compare your renewal notice to the actual rent trend, not just last year's rate. National average asking rent for a two-bedroom fell 4.7% year-over-year as of May 2026, and is now about 7.8% below its May 2024 peak of $2,202 — even though it remains roughly 22% above its April 2021 low of $1,662. If your landlord's renewal increase doesn't reflect the local downward trend, that's a legitimate point to raise, especially outside jurisdictions with strict rent-increase caps.

What to prepare:

• If you're weighing whether to sign a 12-month lease now or wait, note that CMHC's outlook expects most of the current wave of new rental supply to complete over the next 12 to 18 months, which should keep downward pressure on asking rents in oversupplied markets like Toronto and Calgary through the rest of 2026.
• In Calgary and Edmonton specifically, treat the standard "3% is a tight market" rule of thumb with caution: CMHC suggests Alberta's balanced vacancy rate is actually above 5%, given the scale of new construction, so a posted vacancy rate of 5.0% (Calgary's 2025 figure) reflects real oversupply, not a typical market.

Resources:

• CMHC's Rental Market Survey data by city (cmhc-schl.gc.ca)
• Your provincial residential tenancy board for renewal-notice rules and any rent-increase guideline that applies to your unit
• Local tenant advocacy organizations for help interpreting a renewal notice that seems out of step with market data

If You Own a Rental Property:

Immediate action:

• If your unit is in a newer building in Toronto, Calgary, or Edmonton, budget for longer vacancy periods and plan incentives into your pricing rather than holding out for last year's rent. CMHC's data shows rental starts running at nearly double the 10-year average nationally, which is the direct cause of the vacancy and incentive trend — more competition for tenants is a supply story, not a temporary blip.
• Reassess your turnover assumptions. CMHC's update found tenant turnover is highest among higher-rent units, as tenants trade up to newer buildings, which can free up your unit for a different tenant profile if you're in an older, lower-priced building — a segment CMHC describes as seeing improved relative affordability for renters.

For All Canadians:

Even if you're not buying, renewing, or renting this year, this update matters because CMHC is forecasting one of the weakest GDP growth years in recent decades outside an outright recession — just 0.7% in 2026 — driven partly by the same high-carrying-cost, cautious-household dynamic reshaping housing. A soft housing and rental market is generally good news for your cost of living, but it also reflects real economic caution: elevated unemployment, slower income growth, and households delaying big purchases. If your job is tied to construction, real estate services, or mortgage lending, this outlook is worth reading in full, since CMHC's housing starts forecast — 247,000 units in 2026, falling to 223,000 in 2027 and 216,000 in 2028 — points to a slower building pace than the past two years.

The News: What Happened

According to CMHC, the mid-year update to its 2026 Housing Market Outlook was released on July 22, extending its forecast horizon through 2028 and covering both the ownership and rental markets across 18 major Canadian markets. The update forecasts the national MLS average resale price at approximately $698,000 in 2026, $705,000 in 2027, and $727,000 in 2028, alongside resale sales volumes rising modestly from about 489,000 units in 2026 to 509,000 units by 2028.

CMHC's forecast puts average five-year fixed mortgage rates at 5.1% in 2026, rising to 5.4% in 2027 and 5.5% in 2028, citing persistently high long-term bond yields. Variable rates, the agency says, should stay roughly stable through early 2026 before likely rising again as the Bank of Canada normalizes its policy rate — a rate that has now been held at 2.25% through six consecutive decisions as of July 15, according to the Bank of Canada.

On the rental side, according to CMHC's separately published 2026 Mid-Year Rental Market Update, the national average asking rent for a two-bedroom unit fell 4.7% year-over-year as of May 2026, with 2025 vacancy rates ranging from 2.7% in Halifax to 5.0% in Calgary. CMHC's report, as summarized by real estate publication Storeys, found landlords in oversupplied newer buildings offering incentives such as multiple months of free rent and cash bonuses to attract tenants, while rental starts have run at close to double the 10-year average nationally.

CMHC's baseline outlook does not forecast a recession, but flags real GDP growth of just 0.7% for 2026 — among the weakest years outside an actual downturn — with an alternative scenario showing a 0.1% contraction if economic and geopolitical uncertainty worsens.

Analysis: Why This Matters

Based on our analysis of how this update compares with CMHC's original February 2026 outlook, the direction of the forecast hasn't changed dramatically — but the specificity has. A market described in February as facing a "possible recession" amid "subdued" demand is now quantified with real numbers: a 5.1% mortgage rate, a $698,000 average price, and city-by-city vacancy data. That shift from qualitative caution to quantitative forecasting is what makes this update genuinely useful for household budgeting, rather than just a sentiment check.

Historical Context:

The current environment traces back to the Bank of Canada's rapid rate increases in 2022-2023, which cooled a market that had overheated during the pandemic, followed by a slower-than-expected recovery through 2024-2025 as elevated bond yields kept fixed mortgage rates high even as the central bank's policy rate came down. CMHC's forecast that fixed rates will rise further in 2027-2028, even as variable rates stay comparatively flat near-term, reflects a bond market pricing in persistent government borrowing and inflation risk rather than a return to pre-2022 conditions.

What Happens Next:

Watch for the Bank of Canada's next scheduled rate announcements to test whether the "normalization" CMHC references actually begins in the second half of 2026, and watch CMHC's next quarterly starts data (typically released mid-month) to see whether the 247,000-unit 2026 starts forecast is holding, since a bigger-than-expected drop in construction would tighten both the ownership and rental markets faster than this outlook currently assumes.

Your Action Plan

Immediate (This Week):

• If you're house-hunting, get pre-approved using a rate near CMHC's 5.1% forecast, not today's advertised promotional rate.
• If your mortgage renews within six months, request renewal quotes from your current lender and at least one competitor now.
• If you're renting in Toronto, Ottawa, or Montreal, ask your landlord directly about incentives before renewing or signing.

Short-term (This Month):

• Run your own household numbers against CMHC's baseline (0.7% GDP growth) and downside (-0.1%) scenarios to stress-test your budget.
• If you're a landlord with a unit in a newer building, revisit your asking rent against CMHC's city-level asking-rent index rather than last year's comparable.

Long-term (This Year):

• Track CMHC's quarterly starts and price updates against this forecast to see whether Ontario's price softness and BC's partial recovery are holding.
• If you're planning a 2027 purchase or renewal, budget around CMHC's 5.4% forecast fixed rate rather than assuming a return to pre-2022 borrowing costs.

Other Perspectives

CMHC (Federal Housing Agency):

CMHC frames the outlook as one of gradual stabilization rather than crisis, projecting no recession in its baseline scenario while acknowledging that "domestic demand and household spending are expected to remain weak" through 2028 due to high unemployment and slower income growth.

Real Estate Industry Analysts:

Coverage in Storeys and other industry publications has emphasized the rental market's shift in landlords' favour toward tenants, noting that "newer units are taking longer — sometimes months — to rent out" and that CMHC itself now suggests the traditional 3% vacancy benchmark understates how balanced many markets actually are.

Renters and Tenant Advocates:

Even with softer asking rents for new leases, CMHC's own data shows affordability has worsened for existing tenants in most markets even as it improves for new tenants signing today — a distinction tenant advocates have flagged as leaving longer-term renters worse off than the headline rent-decline numbers suggest.

Mortgage and Lending Professionals:

Mortgage brokers have generally welcomed the added forecast specificity, since a published rate trajectory — even one trending upward — gives renewing borrowers a concrete number to plan around instead of the wide range of guesses common through 2024 and 2025.

Note: Including multiple perspectives doesn't imply all views are equally valid, but ensures readers can make informed judgments.

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Corrections Policy

We strive for accuracy. If you find an error in this analysis, please email us at [email protected]. We will promptly investigate and correct any factual inaccuracies.

Updates:

• No corrections to date (as of July 22, 2026).

Related Topics

• Buying a Home in Canada: A step-by-step guide covering mortgage pre-approval, the stress test, and closing costs.
• Renting in Canada: Practical guidance on lease negotiation, tenant rights, and rent-increase rules by province.

Sources

• Canada Mortgage and Housing Corporation, 2026 Housing Market Outlook and mid-year update (cmhc-schl.gc.ca)
• Canada Mortgage and Housing Corporation, 2026 Mid-Year Rental Market Update (cmhc-schl.gc.ca)
• Storeys, reporting on the key takeaways from CMHC's mid-year rental market update
• Global News, reporting on CMHC's recession-risk and demand outlook for 2026
• Bank of Canada, July 15, 2026 interest rate announcement and policy rate hold at 2.25%