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News Analysis

TD Slashes 2026 Housing Forecast: What Buyers and Sellers Should Do Now

TD Economics has dramatically downgraded its 2026 housing forecast, now expecting both sales and prices to fall nationally. Here's what this shift means for buyers, sellers, and homeowners across Canada — and how to adjust your strategy.

By Refdesk Team

TD Slashes 2026 Housing Forecast: What Buyers and Sellers Should Do Now

What This Means for You

If you've been watching the Canadian housing market and waiting for clarity on whether to buy, sell, or stay put, this week brought a significant signal. TD Economics — one of the country's most-watched forecasters — has sharply reversed its outlook for 2026, now projecting that both home sales and average prices will decline nationally this year. Just three months ago, TD was forecasting a 9.3% jump in sales and a 4.1% rise in prices. The new numbers tell a very different story: sales down 1.8% and prices down 0.3% year-over-year.

This isn't a minor recalibration. It's the largest single-quarter forecast revision TD has issued for the housing market in recent memory, and it reflects a fundamental shift in how economists are reading the combined pressures of US tariff uncertainty, a sluggish economy, rising energy costs from the Iran conflict, and persistent affordability challenges in Canada's largest markets.

Here's our practical guidance on what to do, based on where you stand.

If You're a Prospective Buyer

This could be the opportunity you've been waiting for — but timing matters.

The revised forecast suggests that sellers in Ontario and B.C. are facing meaningful price declines, which may open doors for buyers who've been priced out. TD now expects Ontario prices to fall 4% in 2026 (previously forecast at +0.6%) and B.C. prices to decline 1.2% (previously +3.6%). For a buyer looking at a $700,000 home in Ontario, a 4% decline represents approximately $28,000 in savings compared to late-2025 prices.

Immediate action steps:

  • Get pre-approved now. With the Bank of Canada holding its policy rate at 2.25% as of March 18, 2026, current mortgage rates may represent a window before potential upward pressure from energy-driven inflation. A five-year fixed rate is currently available in the 4.0–4.4% range from major lenders.
  • Focus on markets with the highest inventory. Nationally, months of supply sit at 4.3 months as of February 2026. In Ontario and parts of B.C., supply is even higher, giving buyers negotiating leverage. Check your local real estate board's monthly statistics to see inventory levels in your target area.
  • Don't rush into bidding wars. The spring market is historically when activity picks up, but TD's data shows first-quarter 2026 was notably weak. Sellers who've been sitting on listings for 60+ days may be more willing to negotiate.

Example scenario: A first-time buyer in the Greater Toronto Area looking at a $650,000 condo that was listed at $680,000 in January. Based on TD's forecast of a 4% provincial price decline, that condo could realistically be available at $625,000–$640,000 by mid-2026 if the trend holds. On a 25-year mortgage at 4.2% with 10% down, the monthly payment difference between $680,000 and $640,000 is approximately $215/month — or $2,580 per year. Over five years, that's nearly $13,000 in savings.

Our recommendation: If you're financially ready and pre-approved, this may be a good time to negotiate aggressively in Ontario and B.C. markets. But don't overextend — TD also forecasts a rebound in 2027 with sales jumping 9.6%, which could push prices back up.

If You're a Current Homeowner Considering Selling

The window for top-dollar sales in Ontario and B.C. has likely closed for 2026.

TD's forecast shows that Ontario is experiencing the weakest market conditions in the country, with average home prices posting the steepest declines nationally. If you're in Ontario or B.C. and were planning to sell this year, you need to recalibrate your expectations.

What to consider:

  • Price competitively from day one. In a declining market, overpricing leads to stale listings. Homes that sit on the market for more than 30 days in the current environment tend to sell below asking. Review comparable sales from the last 60 days, not six months ago — the market has shifted.
  • Factor in the carrying costs of waiting. If your home is valued at $800,000 and you're paying a mortgage at 4.5% interest, your monthly carrying cost (mortgage, property tax, insurance, maintenance) is likely $4,500–$5,500. Every month of delay costs real money. In a flat-to-declining market, waiting rarely pays off.
  • Consider your next move carefully. If you're selling to buy in the same market, the decline affects both sides of the transaction. Downsizers may benefit — selling a $900,000 home that drops 4% means losing $36,000, but buying a $500,000 replacement that also drops 4% saves you $20,000. The net impact is smaller than the headline number suggests.

Example scenario: A homeowner in Mississauga with a detached home currently valued at $1.1 million. Based on TD's Ontario-specific forecast of a 4% price decline, this home could be worth approximately $1,056,000 by year-end. If the homeowner is planning to downsize to a $600,000 townhouse, the townhouse would also decline by roughly $24,000. The net impact of waiting versus selling now is the difference: approximately $20,000 in lost equity on the larger home minus $24,000 saved on the smaller purchase. In this case, waiting could actually save money — but only if you execute both transactions in the same timeframe.

If You're in Alberta, Saskatchewan, or Quebec

Your market is telling a different story.

While Ontario and B.C. face headwinds, TD's forecast shows Alberta maintaining relatively positive conditions. Alberta's housing market benefits from still-positive job growth, oil-sector strength (boosted by elevated global energy prices from the Iran conflict), and more balanced supply-demand conditions. Saskatchewan, Quebec, and Atlantic provinces are also expected to see continued modest price growth.

What to do:

  • Alberta sellers: You're in a stronger position than sellers in Ontario or B.C. Current conditions support trend-like price growth, though population growth is slowing. If you've been considering listing, the spring market remains a reasonable window.
  • Prairie and Quebec buyers: Don't assume national headlines apply to your market. Saskatchewan, Manitoba, and Quebec have seen decent price appreciation through 2025–2026. Check your local MLS data before making decisions based on national forecasts.
  • Atlantic Canada: The spaceport investment in Nova Scotia and ongoing defence procurement spending continue to support regional housing demand. Prices in Halifax and Moncton remain elevated relative to historical norms.

For All Canadians: Mortgage Renewal Strategy

If your mortgage is up for renewal in 2026–2027, this forecast matters.

With the Bank of Canada holding at 2.25% and inflation at 1.8% (February 2026), the current rate environment is relatively favourable for renewals. However, the Iran war-driven energy price surge could push inflation higher in coming months, potentially delaying any further rate cuts.

Our recommendations:

  1. If renewing in 2026: Consider locking in a 3-year fixed rate to capture current pricing while maintaining flexibility. Five-year fixed rates (4.0–4.4%) offer predictability, but a 3-year term lets you renegotiate if rates decline further.
  2. If renewing in 2027: TD's forecast shows a housing rebound expected in 2027. Start shopping for rates 120 days before your renewal date — most lenders offer rate holds of that length. Don't just accept your current lender's posted rate; use comparison tools at ratehub.ca or nesto.ca.
  3. Variable vs. fixed: With the Bank of Canada in a "wait and see" mode, variable rates carry more risk than usual. The Bank cited upside inflation risks from energy prices in its March statement. We recommend fixed rates for borrowers who need payment predictability.

Calculation example: On a $400,000 mortgage balance renewing from a 5.5% rate to 4.2% fixed (5-year), your monthly payment on a 25-year amortization drops from approximately $2,432 to $2,143 — a savings of $289/month or $3,468/year. Over the full 5-year term, that's $17,340 in interest savings.

The News: What Happened

On March 26, 2026, TD Economics released its updated Provincial Housing Market Outlook, sharply downgrading its forecast for Canadian home sales and prices in 2026. According to CBC News, TD now expects national home sales to fall 1.8% year-over-year, a dramatic reversal from its December 2025 forecast of a 9.3% gain. National average home prices are now projected to decline 0.3%, compared with the previously expected 4.1% increase.

As reported by BNN Bloomberg, the downgrade was driven by weak first-quarter performance, with housing activity constrained by a subdued economy, heightened uncertainty from US trade policy, and ongoing cost-of-living pressures. TD economist Rishi Sondhi noted that housing activity will likely take most of the year to recoup first-quarter losses, according to the Canadian Press.

Ontario and British Columbia received the sharpest forecast downgrades. According to TD's report, Ontario prices are now expected to fall 4% (previously +0.6%), while B.C. prices are projected to decline 1.2% (previously +3.6%). Ontario's housing market is described as the weakest in Canada, with average home prices posting the steepest drop of any region nationally.

The Canadian Real Estate Association (CREA) separately forecasts 494,512 residential sales in 2026, representing a 5.1% increase from 2025, according to its most recent quarterly forecast. However, CREA's forecast was issued before the full extent of the first-quarter slowdown was apparent, and may face similar downward revisions.

This shift comes amid broader economic headwinds. The Bank of Canada held its policy rate at 2.25% on March 18, 2026, citing weak near-term growth, rising unemployment (6.7% in February), and upside inflation risks from elevated global energy prices driven by the Iran conflict. According to the Bank of Canada's statement, CPI inflation eased to 1.8% in February but is expected to rise in coming months due to higher gasoline prices.

Analysis: Why This Matters

Based on our analysis, TD's forecast revision represents more than a routine adjustment — it signals that the Canadian housing recovery narrative that dominated late 2025 and early 2026 has fundamentally stalled. The convergence of trade uncertainty, geopolitical energy shocks, and cautious monetary policy has created a market environment that is distinctly different from what most forecasters anticipated.

Historical Context

The last time a major Canadian bank reversed a housing forecast this dramatically mid-year was during the early stages of the COVID-19 pandemic in 2020. Before that, forecasters were similarly caught off guard during the 2017–2018 correction that followed the B20 stress test introduction. The current revision is notable because it was triggered not by a single policy change, but by the cumulative weight of multiple negative factors arriving simultaneously.

Canada's housing market has been on a volatile ride since 2020: a pandemic boom, a rate-hike correction in 2022–2023, a partial recovery in 2024, and now a tariff-and-geopolitics-driven stall in 2026. For buyers and sellers, the key takeaway is that housing cycles have become shorter and less predictable than the multi-year trends of previous decades.

What Happens Next

Based on TD's own projections, the market downturn may be relatively short-lived. The bank forecasts a rebound in 2027, with national sales jumping 9.6% year-over-year and prices rising 2.7%. This suggests that TD sees the current weakness as cyclical rather than structural — driven by temporary uncertainty rather than fundamental overvaluation.

The next Bank of Canada interest rate decision is scheduled for April 16, 2026. If inflation remains contained despite energy price pressures, there is potential for another rate cut later in 2026, which would support housing activity. However, if the Iran conflict escalates further and oil prices remain above $120/barrel, the Bank may be forced to hold rates longer than expected, extending the housing slowdown.

We expect CREA and CMHC to issue updated forecasts in the coming weeks that may align more closely with TD's revised outlook. Spring market data (April–May sales figures) will be the critical indicator of whether the downturn is deepening or stabilizing.

Your Action Plan

Immediate (This Week):

  • Check your current mortgage renewal date and rate — calculate potential savings at ratehub.ca
  • If you're pre-approved for a home purchase, confirm your rate hold is still valid with your lender
  • Review your local real estate board's February/March statistics for inventory levels and average days on market

Short-term (This Month):

  • If selling in Ontario or B.C., meet with your realtor to reprice based on current comparable sales, not year-ago data
  • If buying, start tracking listings in your target area daily — watch for price reductions on 30+ day listings
  • If renewing a mortgage, get quotes from at least 3 lenders and a mortgage broker before accepting your current lender's offer

Long-term (This Year):

  • If you're a first-time buyer in Ontario or B.C., consider positioning for a late-2026 or early-2027 purchase when prices may stabilize and the forecast rebound begins
  • Review your overall financial position — ensure your emergency fund covers 6 months of housing costs before committing to a purchase in an uncertain market
  • Monitor Bank of Canada rate decisions (next: April 16, 2026) for signals on future mortgage rate direction

Other Perspectives

Government View:

Federal Housing Minister Sean Fraser has consistently emphasized that the government's housing policies — including the First-Time Home Buyer Incentive, 30-year mortgage amortizations for first-time buyers, and increased immigration targets — are designed to support long-term housing supply and affordability, according to CTV News. Provincial governments in Ontario and B.C. continue to push for faster permit approvals and higher-density zoning.

Opposition View:

Conservative housing critic Scott Aitchison has argued that the Liberal government's policies have failed to address the fundamental supply-demand imbalance in Canadian housing, according to the National Post. The Conservatives have called for eliminating the federal carbon tax on home heating and reducing regulatory barriers to construction as alternatives to demand-side interventions.

Expert Analysis:

TD economist Rishi Sondhi noted that housing activity will likely take most of the year to recoup first-quarter losses, according to BNN Bloomberg. CIBC and BMO have not yet released updated forecasts but are expected to follow with similar revisions. Independent economist Trevor Tombe of the University of Calgary has warned that the Iran war energy shock adds a new layer of uncertainty to the housing outlook, according to The Hub.

Affected Parties:

The Canadian Real Estate Association and local real estate boards have acknowledged softer market conditions but emphasized regional variation, with months of supply at 4.3 months nationally in February 2026 — balanced nationally, but tilted toward buyers in Ontario and parts of B.C. First-time buyers, who represent a significant share of pent-up demand, may benefit from the price corrections if they can navigate affordability and mortgage qualification challenges.

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

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 March 27, 2026)

Sources

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