Canadian Housing Recovery Stalls As Sales Fall 2.3% In September

Canadian Housing Recovery Stalls As Sales Fall 2.3% In September
News| October 16, 2026| Joel Bowey
Canada + Apartment Buildings

Canada’s tentative housing recovery stumbled into fall, with September home sales dropping 2.3% from August and the Canadian Real Estate Association sharply cutting its outlook for the rest of the year.

Actual sales were 7.7% below September 2025, while the national MLS Home Price Index slipped 0.4% from August and 3.4% year over year. The average sale price was $666,538, down 1.6% from a year earlier, according to CREA’s latest housing market report.

The setback follows several months in which the market appeared to be finding its footing. Sales began recovering in May and held largely steady through the summer before edging down 0.7% in August and falling more sharply in September.

“Many of Canada’s housing markets took a step back in September,” CREA senior economist Shaun Cathcart said, pointing to another jump in fixed mortgage rates and renewed expectations for Bank of Canada rate increases.

CREA now expects 444,530 residential properties to change hands in 2026, down 5.2% from 2025. That is nearly 19K fewer sales than it forecast in July, when it expected activity to decline just 1.4%.

The renewed weakness matters beyond the resale market. Developers are already contending with sluggish pre-construction demand, difficult project economics and tighter financing thresholds.

The consequences are particularly evident in Toronto, where condominium construction has virtually ground to a halt. Just 156 condo units broke ground in the city during the first half of 2026, according to CMHC, compared with an annual average of 7,000 over the previous decade.

Purpose-built rental construction has been moving in the opposite direction, with starts across the Toronto region climbing 82% in the first half of 2026. But the shift toward rentals has not been enough to offset the collapse in ownership housing.

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