CREA now expects a total of 444,530 homes to be sold by the end of this year, representing a 5.2% decrease from 2025.
That’s down from its July forecast of a 1.4% year-over-year decline, which marked a reversal from its April forecast of a 1% gain. The association had predicted 5.1% growth year-over-year in January.
CREA also projects the national average home price to tick 0.2% higher on an annual basis to $681,681 this year, which is around $5,000 lower than predicted in the summer.
The association said its revised forecast comes amid a “roller-coaster year,” with the global energy crisis fuelling inflation risks and affecting borrowing costs.
It cited higher fixed mortgage rates and ongoing uncertainty around variable rates, adding that the Bank of Canada has adopted “a notably more hawkish tone.” Those factors hurt September’s residential real estate activity, CREA said.
National home sales down compared with last year
National home sales were down 7.7% compared with the same month last year, while activity also fell 2.3% from August.
“After a four-month run of modestly positive progress on demand, supply, and prices, many of Canada’s housing markets took a step back in September,” said CREA senior economist Shaun Cathcart in a news release.
“This was hardly surprising given the latest jump in fixed mortgage rates, and with the Bank of Canada now widely expected to follow with a rate hike before the end of the year.”
Worries about higher borrowing costs on the horizon led to a “significantly” shorter fall market compared to usual expectations for the season, said Marco Pedri, a broker with Shoreline Realty.
He said many of those considering a home purchase already made their move in the summer or first few weeks of fall “in an effort to lock in a favourable interest rate.”
That’s left remaining sellers in limbo, and they’ll likely have to wait until next year before demand picks up again.
“It’s honestly a game of chicken. It’s about who’s going to cave first,” Pedri said.
“I think lot of purchasers … are going to try and see what best deal they can get come January, February, March, when these sellers who have had their property on the record for so long may be at a point to just say, ‘Hey, listen, at this point, I just want to sell.’”
National average home price has fallen considerably compared to last year
In September, the national average sale price fell 1.6% compared with the same month a year earlier to $666,538.
CREA’s own home price index, which aims to represent the sale of typical homes, edged 0.4% lower from August to September, while the index dropped 3.4% on a year-over-year basis.
The number of newly listed properties decreased 1.8% month-over-month. Slightly more than 200,000 properties were listed for sale by the end of the month, up 1.8% from a year earlier.
