Canada Housing & Real Estate 2026
Introduction
Canada’s housing market is entering a different phase in 2026. Home prices have softened from previous peaks in several major markets, rental conditions have become less tight, and buyers are generally facing more balanced market conditions than during the pandemic-era housing boom.
According to the Canadian Real Estate Association, national home sales declined 0.7% month over month in August 2026 and were 6.9% below August 2025. The national MLS Home Price Index was down 3% year over year, while 4.8 months of inventory remained available nationally.
At the same time, Canada’s long-term housing supply challenge remains significant. CMHC estimates that Canada would need approximately 417,000 to 469,000 housing starts every year through 2036 to restore affordability to pre-pandemic levels. Current projections remain considerably below that requirement.
The rental market has improved as new supply comes online and population growth slows. Rentals.ca reported average asking rent of $2,035 in August 2026, down 4.8% from a year earlier.
For first-time buyers, renters, homeowners, developers and investors, the Canadian housing story in October 2026 is therefore mixed: affordability has improved in some areas, but the country still needs much more housing supply.
Market Updates
What is the current state of Canada’s housing market in October 2026?
Canada’s housing market is relatively balanced compared with the extreme conditions seen earlier in the decade. CREA reported that August home sales fell 0.7% month over month and 6.9% year over year, while the national MLS Home Price Index declined 3% from August 2025.
There were just under 200,000 properties listed for sale at the end of August, with 4.8 months of inventory nationally. This is close to a balanced market rather than a clear buyer’s or seller’s market.
However, conditions differ significantly between cities. Calgary and Edmonton continue to show stronger construction activity, while Toronto, Vancouver and Montreal face larger affordability and ownership-supply challenges.
How are home prices changing across Canada?
Canadian home prices have generally softened compared with the previous year. The national MLS Home Price Index was down 3% year over year in August 2026 and unchanged from July.
The national average sale price was approximately $668,219, which was actually 0.6% higher than August 2025 because average prices are affected by the types and locations of homes sold.
This means the HPI is generally more useful for understanding underlying price trends than the national average sale price.
Regional differences remain substantial, with some Prairie markets performing better than expensive markets in Ontario and British Columbia.
Which Canadian cities have the strongest and weakest housing markets?
There is no single strongest or weakest market because performance depends on affordability, construction, prices and demand.
CMHC identifies Calgary and Edmonton as relatively strong housing supply markets. Calgary has almost halved its housing supply gap, while Edmonton currently has no measurable supply gap.
Toronto and Vancouver remain highly unaffordable despite some recent price improvements.
Montreal and Ottawa face larger projected supply gaps, particularly because ownership-oriented construction is weakening.
How are home sales and housing inventory changing?
National home sales fell 0.7% month over month in August 2026 and were 6.9% below August 2025.
At the same time, new listings increased 3.3% month over month, giving buyers more properties to consider.
There were approximately 4.8 months of inventory nationally, unchanged for the fourth consecutive month. CREA considers roughly 45%,65% on its sales-to-new-listings ratio consistent with balanced conditions, and August’s ratio was 49.1%.
What is happening to housing supply and demand across Canada?
Housing demand is being affected by slower population growth, changing immigration levels, employment conditions, mortgage costs and household affordability.
CMHC expects demand to be weaker in the near term than during the post,pandemic period, but expects housing needs to increase again over the longer term.
The problem is that construction may slow faster than demand.
CMHC estimates Canada still faces an annual supply gap of approximately 187,000 to 238,000 homes relative to what would be needed to restore pre-pandemic affordability by 2036.
How affordable is housing for Canadian buyers in 2026?
Housing affordability has improved in some markets because prices have softened and borrowing conditions are less restrictive than during the peak of the rate-hike cycle.
However, affordability remains difficult in Toronto and Vancouver because home prices remain high relative to household incomes.
Calgary and Edmonton provide comparatively better affordability conditions among major markets.
CMHC warns that recent affordability improvements could be temporary if housing construction remains below future demand.
What factors are driving changes in Canada’s real estate market?
Interest rates, mortgage qualification, household income, employment, population growth, immigration, construction costs and housing supply are all important factors.
Higher construction and financing costs have made some new projects difficult to launch.
Condominium presales have also weakened in several major markets, reducing the amount of ownership-oriented housing being started.
At the same time, rental construction remains relatively strong because rental projects are supported by demand, financing programs and government incentives.
What are the major housing market trends to watch going forward?
The main trends are softer resale activity, relatively stable national prices, improving rental conditions and a shift toward purpose-built rental construction.
The biggest long-term concern is the decline in ownership-oriented construction, particularly condominiums.
CMHC says purpose-built rental apartments now account for about 60% of housing starts, compared with less than 20% a decade ago.
The key question is whether Canada can maintain enough construction today to meet stronger housing demand later.
First-Time Buyers
What should first-time home buyers in Canada know in 2026?
First-time buyers should understand their down-payment requirement, mortgage qualification, closing costs and eligibility for federal and provincial programs.
The FHSA allows eligible buyers to save up to $8,000 per year toward a qualifying first home, with a $40,000 lifetime contribution limit.
The Home Buyers’ Plan also allows eligible buyers to withdraw up to $60,000 from an RRSP.
In 2026, eligible first-time buyers of qualifying new homes can also access the federal First-Time Home Buyers’ GST/HST rebate.
How much down payment is required to buy a home in Canada?
For homes priced at $500,000 or less, the minimum down payment is generally 5%.
For homes above $500,000 and below $1.5 million, buyers generally need 5% on the first $500,000 and 10% on the portion above $500,000.
Homes priced at $1.5 million or more generally require at least 20% down.
Buyers who put less than 20% down will generally need mortgage loan insurance.
How does the First Home Savings Account help Canadian buyers?
The FHSA is a registered account designed specifically for eligible first-time home buyers.
Contributions can provide a tax deduction, while qualifying withdrawals for a first home are tax-free.
The annual contribution limit is $8,000 and the lifetime contribution limit is $40,000.
The account can therefore help buyers build a down payment while receiving tax advantages.
How does the Home Buyers’ Plan help first-time buyers?
The Home Buyers’ Plan allows eligible buyers to withdraw up to $60,000 from an RRSP to buy or build a qualifying home.
The withdrawal can be made without immediate income tax when the program’s conditions are satisfied.
Amounts withdrawn generally need to be repaid to the RRSP over the applicable repayment period.
Eligible buyers can also potentially use the HBP and FHSA for the same home if all conditions are met.
What government incentives are available to first-time home buyers?
The new First-Time Home Buyers’ GST/HST rebate is one of the most significant federal measures available in 2026.
Eligible buyers can recover up to $50,000 of GST or the federal portion of HST on qualifying new or substantially renovated homes.
Homes valued at $1 million or less can qualify for up to the full $50,000 rebate, while the rebate is gradually reduced for homes between $1 million and $1.5 million.
Provincial and territorial programs may provide additional assistance.
How much income do buyers need to qualify for a mortgage?
There is no single income figure that guarantees mortgage approval.
Lenders consider household income together with debts, credit history, down payment, mortgage rate, property taxes and other housing costs.
The mortgage stress test also affects how much a borrower can qualify for.
For uninsured mortgages, the qualifying rate is currently the greater of the contract rate plus 2 percentage points or 5.25%.
What additional costs should first-time buyers budget for?
Buyers should budget for more than the down payment and mortgage.
Common costs include legal fees, home inspections, appraisal fees, title insurance, land-transfer taxes where applicable and moving expenses.
There may also be mortgage insurance costs when the down payment is below 20%.
After purchase, homeowners need to budget for property taxes, insurance, utilities, maintenance and unexpected repairs.
What are the biggest challenges facing first-time home buyers in Canada?
The biggest challenges include high home prices, saving a sufficient down payment, qualifying for a mortgage and managing monthly housing costs.
Even where prices have declined, the total cost of ownership can remain high.
First-time buyers in Toronto and Vancouver face particularly difficult affordability conditions.
Using programs such as the FHSA, HBP and GST/HST rebate can reduce some upfront costs, but they do not eliminate the broader affordability problem.
Rental Crisis
What is the current state of Canada’s rental market in October 2026?
Canada’s rental market has become less tight compared with recent years.
Rentals.ca reported average asking rent of $2,035 in August 2026, down 4.8% year over year and marking the 23rd consecutive month of annual decline.
The improvement is linked to increased rental construction and slower population growth.
However, affordable rental housing remains difficult to find, especially for lower-income households.
Why are rental prices still high in many Canadian cities?
Rental prices remain high because the cost of housing, land, construction and operating rental properties remains elevated.
Although new rental supply has increased, much of the new supply is concentrated in newer and more expensive buildings.
The market is also different from city to city.
Vancouver and Toronto continue to have substantially higher asking rents than Edmonton and Calgary.
Which Canadian cities have the most expensive rental markets?
Among Canada’s largest markets, Vancouver remained the most expensive in August 2026 at about $2,704 for apartment and condo asking rents.
Toronto followed at about $2,570, while Ottawa was approximately $2,168.
Montreal was around $1,955, Calgary $1,825 and Edmonton $1,520.
Outside the largest markets, North Vancouver had an average asking rent of about $3,018.
How serious is the shortage of affordable rental housing?
The shortage of affordable rental housing remains serious even though overall rental-market conditions have improved.
CMHC reported that the national purpose-built rental vacancy rate reached 3.1% in 2025, up from 2.2% in 2024.
Higher vacancy gives renters more choice, but new units are not necessarily affordable to low-income households.
The most affordable rental segment remains much more competitive.
What is causing Canada’s rental housing shortage?
The shortage has resulted from years of insufficient housing construction combined with population growth and high demand.
Recent rental construction has improved supply, but construction is increasingly concentrated in purpose-built rental housing.
CMHC says purpose-built rentals now make up roughly two-thirds of apartment starts in key Canadian markets.
The challenge is ensuring that new construction includes enough units at prices ordinary households can afford.
How are newcomers and low-income renters affected by rising rents?
Newcomers can face additional challenges such as limited Canadian rental history, credit history and competition for affordable units.
Low-income renters are particularly affected because the cheapest units are often in the shortest supply.
Even though average asking rents have declined, this does not necessarily mean that every renter can find an affordable home.
Community housing and rent-support programs therefore remain important.
How do rent-control rules differ across Canadian provinces?
Rent-control systems are primarily provincial and differ significantly.
Ontario regulates annual increases for many covered rental units, while some newer units are exempt from the guideline.
British Columbia also regulates annual increases for covered rentals.
Quebec has its own rent-setting system, while Alberta does not operate the same province-wide rent-control framework.
Renters should therefore check the rules that apply to their specific province and rental unit.
What measures are governments taking to address Canada’s rental crisis?
Governments are increasing rental construction, protecting existing affordable rental units and supporting housing infrastructure.
The federal Canada Rental Protection Fund is backed by $1.5 billion and is designed to help community housing providers acquire and preserve at-risk affordable rental properties.
Build Canada Homes is also supporting affordable and supportive housing.
Infrastructure programs are being used to unlock additional residential development.
Mortgage & Rates
What is happening to mortgage rates in Canada in October 2026?
The Bank of Canada held its overnight policy rate at 2.25% on September 2, 2026.
Variable mortgage rates are more directly influenced by lender prime rates and changes in the Bank of Canada’s policy rate.
Fixed mortgage rates are influenced more by bond yields and market expectations.
Therefore, mortgage rates do not necessarily move in exactly the same direction as the Bank of Canada’s overnight rate.
How do Bank of Canada interest-rate decisions affect Canadian mortgages?
Bank of Canada decisions directly influence the cost of short-term borrowing and lenders’ prime rates.
Variable and adjustable-rate mortgage borrowers can therefore see their borrowing costs change when the policy rate changes.
Fixed-rate borrowers are more influenced by bond-market conditions.
Interest-rate changes also affect how much a prospective buyer can qualify for.
What is the difference between fixed and variable mortgage rates?
A fixed mortgage keeps the interest rate unchanged for the mortgage term.
This provides payment certainty and protects borrowers from short-term rate increases.
A variable mortgage rate can move as the lender’s prime rate changes.
Variable mortgages can become less expensive when rates fall but more expensive when rates rise.
How are mortgage rates affecting home affordability?
Mortgage rates directly influence monthly payments and therefore the amount buyers can afford to borrow.
Lower rates can increase purchasing power, while higher rates generally reduce it.
However, lower rates can also encourage more buyers to enter the market and potentially increase competition for homes.
Affordability therefore depends on the combination of mortgage rates, home prices, household income and housing supply.
What is the mortgage stress test and who must pass it?
The mortgage stress test checks whether borrowers could continue making payments if interest rates or financial conditions became less favourable.
For uninsured mortgages at federally regulated lenders, the minimum qualifying rate is the greater of the contract rate plus 2% or 5.25%.
The test is designed to reduce the risk that borrowers take on mortgages they cannot sustain.
It can also reduce the maximum mortgage amount for which a household qualifies.
How are Canadian homeowners affected when their mortgages come up for renewal?
Mortgage renewal can change a household’s monthly payment because the new rate may differ from the original mortgage rate.
Borrowers should compare rates and terms from multiple lenders before renewing.
They should also consider the remaining amortization, prepayment options and penalties.
A lower advertised rate is not necessarily the best option if it comes with less flexibility or higher fees.
Should home buyers consider fixed or variable mortgages in 2026?
Neither option is automatically better for every borrower.
A fixed mortgage can provide greater payment certainty and may suit households that prefer predictable budgets.
A variable mortgage can provide potential savings when rates decline but exposes the borrower to future rate movements.
Buyers should consider their income stability, risk tolerance, expected time in the property and ability to absorb payment changes.
What factors should Canadians consider before choosing a mortgage?
Buyers should examine the interest rate, term, amortization, payment frequency and total interest cost.
They should also understand penalties for breaking the mortgage and options for refinancing or making extra payments.
The lender’s flexibility and mortgage features can be just as important as the headline rate.
Most importantly, borrowers should choose a mortgage payment that remains manageable under less favourable financial conditions.
New Developments
What are the major housing developments underway across Canada?
Canada is investing heavily in housing-enabling infrastructure and affordable housing.
The federal Build Communities Strong Fund provides $51 billion over 10 years beginning in 2026–27, including funding for infrastructure that supports housing growth.
Build Canada Homes is also supporting direct construction, affordable housing and rental-housing preservation.
However, actual housing delivery remains dependent on provincial, municipal and private-sector construction.
Where is Canada building the most new homes in 2026?
Calgary and Edmonton are among the strongest major markets for housing construction relative to population.
CMHC’s 2026 data shows Calgary and Edmonton leading major markets in housing starts per 10,000 people.
In August, Calgary had more than 25,000 units under construction, while Edmonton had more than 18,500.
Other major markets are also building substantial numbers of homes, but their supply is increasingly concentrated in rental projects.
How is new construction affecting housing supply?
New construction is helping improve rental availability and reduce pressure in some rental markets.
However, the composition of construction matters.
CMHC reports that purpose-built rental housing has become a much larger share of new apartment construction, while condominium and other ownership-oriented construction has weakened.
This means Canada may improve rental supply while still facing a shortage of ownership homes.
What cities are seeing the strongest growth in new housing projects?
Calgary and Edmonton are among the strongest major markets for housing starts relative to population.
Calgary has almost halved its estimated housing supply gap through strong construction.
Edmonton has kept construction broadly aligned with population growth and currently has no measurable supply gap.
Toronto, Vancouver and Montreal are still building, but ownership-oriented construction is facing greater challenges.
How many new homes does Canada need to address the housing shortage?
CMHC estimates that Canada needs approximately 417,000 to 469,000 housing starts every year through 2036 to restore affordability to pre-pandemic levels.
Current business-as-usual projections are around 231,000 annual starts.
That creates an estimated annual gap of approximately 187,000 to 238,000 homes.
The numbers demonstrate why simply maintaining current construction levels is unlikely to fully resolve Canada’s long-term affordability problem.
What role are condos and purpose-built rental projects playing in new housing supply?
Purpose-built rental projects are becoming the dominant form of new apartment construction.
CMHC says purpose-built rental housing now accounts for about 60% of housing starts, compared with less than 20% a decade ago.
Condominium construction has weakened because of financing challenges, construction costs and weaker presales.
This creates a long-term concern because condos are an important source of ownership housing.
How are infrastructure projects supporting new residential development?
Housing growth depends on infrastructure such as water, wastewater, roads, public transit and electricity.
The Build Communities Strong Fund is specifically designed to support infrastructure that can enable additional housing.
The fund provides $17.2 billion over 10 years through its provincial and territorial stream for infrastructure priorities related to housing, health and post-secondary education.
Infrastructure investment can therefore help municipalities accommodate new residential development.
What challenges are slowing down housing construction in Canada?
High construction costs, financing costs, land prices and development approvals can make projects difficult to build.
Condominium developers are also facing weaker presales and unsold inventory in some markets.
CMHC says current housing construction is increasingly being driven by projects already under construction, while new project launches have weakened in several major markets.
This creates a risk that future housing supply will fall short when demand strengthens again.
Affordable Housing Policy
What are Canada’s major affordable housing policies in 2026?
Canada’s housing policy is increasingly focused on increasing supply, protecting existing affordable homes and building housing-related infrastructure.
Build Canada Homes is designed to accelerate affordable housing construction.
The Canada Rental Protection Fund focuses on preserving existing affordable rental housing.
The Build Communities Strong Fund supports infrastructure needed for housing growth.
What federal programs are being used to increase affordable housing supply?
Federal initiatives include Build Canada Homes, the Affordable Housing Fund, the Canada Rental Protection Fund and housing-enabling infrastructure programs.
Build Canada Homes received an initial $13 billion investment over five years.
The government has also committed $1 billion toward transitional and supportive housing and up to 4,000 direct-build homes on federal lands.
These programs target different parts of Canada’s housing shortage.
How are provinces and municipalities addressing the housing shortage?
Provinces and municipalities are using zoning reforms, development-charge reductions, infrastructure investment, land policies and housing programs.
Toronto, for example, received $1.5 billion through the Development Charge Reduction Program tied to reducing residential development charges by 40% to 60%.
Municipalities also work with federal and provincial governments on infrastructure.
The effectiveness of these policies depends on how quickly projects can move from approval to actual construction.
What government programs support low-income renters and families?
Support includes affordable housing programs, community housing, rental protection initiatives and homelessness programs.
The Canada Rental Protection Fund is designed to preserve affordable rental homes that might otherwise be lost.
Build Canada Homes is also deploying $1 billion for transitional and supportive housing for people experiencing or at risk of homelessness.
These programs complement broader efforts to increase overall housing supply.
How is Canada addressing homelessness and supportive housing needs?
Canada is combining supportive housing construction with services for people experiencing homelessness or housing instability.
Build Canada Homes has committed $1 billion to transitional and supportive housing.
The federal approach also involves partnerships with provinces, territories, municipalities and Indigenous organizations.
Supportive housing is important because some households need both housing and access to health, employment or social services.
What role does social housing play in Canada’s housing system?
Social and community housing provides housing for people who may not be able to afford market rents.
It can include non-profit housing, co-operative housing and other forms of community-based housing.
The Canada Rental Protection Fund is intended to help community housing providers acquire and preserve affordable rental properties.
In September 2026, the federal government said the program could potentially protect about 7,000 at-risk rental homes during its first five years.
How are housing policies affecting renters and first-time buyers?
Renters can benefit from increased rental supply and programs designed to preserve affordable housing.
First-time buyers benefit from measures such as the FHSA, HBP and the new GST/HST rebate for eligible new homes.
Infrastructure investment can also support future housing supply.
However, policy measures do not immediately solve affordability because housing construction takes years and demand varies by region.
Are current government policies enough to improve housing affordability?
Current policies are addressing several important parts of the housing problem, but available evidence suggests the challenge remains large.
CMHC estimates Canada needs 417,000–469,000 annual housing starts to restore pre-pandemic affordability by 2036, while projected business-as-usual construction is much lower.
Government programs can improve financing, infrastructure and construction incentives.
However, long-term affordability will depend on whether Canada can consistently build enough homes in the right locations and at different price levels.
Airbnb & Short-Term Rentals
What are Canada’s current rules for Airbnb and short-term rentals?
Canada does not have one single nationwide Airbnb rule.
Short-term rentals are regulated through a combination of municipal, provincial and federal requirements.
Cities can impose licensing, zoning and principal-residence rules.
Tax rules also apply, and CRA does not allow deductions for the non-compliant portion of a short-term rental operation.
How do short-term rental regulations differ between Canadian cities?
Rules can vary significantly between municipalities.
Toronto generally requires short-term rentals to operate from the host’s principal residence and limits entire-unit rentals to 180 nights per year.
Vancouver requires a short-term rental licence and generally requires the property to be the operator’s principal residence.
Other Canadian municipalities have different licensing, zoning and duration requirements.
What are the current short-term rental rules in Toronto?
Toronto defines a short-term rental as a dwelling rented for fewer than 28 consecutive days.
Operators generally must use their principal residence.
An entire home can be rented for a maximum of 180 nights per calendar year.
Operators renting individual rooms can rent up to three bedrooms in their principal residence for unlimited nights, subject to the city’s rules.
What are the current short-term rental rules in Vancouver?
Vancouver requires a short-term rental business licence for rentals of fewer than 90 consecutive days.
The property must generally be the operator’s principal residence.
The current city licence fee is $1,108, plus a $77 application fee.
The licence number must be included in online listings, and renters need written landlord permission while strata residents need strata approval.
How do Airbnb regulations affect Canada’s long-term rental supply?
Municipalities regulate short-term rentals partly because converting residential units into tourist accommodation can reduce the supply available to long-term tenants.
Toronto and Vancouver therefore restrict many short-term rentals to principal residences.
The effect varies by neighbourhood and city because not every short-term rental would otherwise be used as a long-term home.
Regulation is intended to balance tourism and homeowner income with housing availability.
What licences and registration requirements apply to short-term rentals?
Requirements depend on the municipality and province.
Toronto requires eligible operators to register with the City.
Vancouver requires a municipal short-term rental business licence and has additional provincial registration requirements.
Hosts may also need to comply with zoning, fire-safety, building, landlord and condominium or strata rules.
Operating without required approvals can result in penalties.
What taxes do Canadian short-term rental operators need to consider?
Short-term rental income generally needs to be reported to the CRA.
Operators may normally deduct eligible expenses incurred to earn rental income, subject to applicable tax rules.
However, for tax years after 2023, expenses relating to a non-compliant short-term rental are restricted.
A rental can be considered non-compliant if it does not meet applicable provincial or municipal registration, licensing or permit requirements.
Why are Canadian cities increasing regulations on short-term rentals?
The main objectives include protecting long-term rental supply, improving neighbourhood conditions, ensuring safety and enforcing local zoning rules.
Cities also want short-term rental operators to follow licensing and taxation requirements.
Toronto explicitly connects its 180-night rule and principal-residence framework with housing availability and affordability objectives.
Vancouver similarly states that its short-term-rental regulations are intended to protect long-term rental housing while allowing residents to earn additional income.
Final Verdict
Canada’s Housing & Real Estate market in October 2026 is more balanced than it was during the strongest housing-boom periods, but the country has not solved its long-term affordability problem.
Home sales remain soft, national prices are below their year-earlier level and inventory is close to a balanced-market range. Calgary and Edmonton continue to show stronger housing-supply performance, while Toronto, Vancouver, Montreal and Ottawa face larger ownership and affordability challenges.
The rental market is showing encouraging signs. Average asking rent has fallen for 23 consecutive months, while increased rental construction has given tenants more choice. Nevertheless, affordable rentals remain difficult to find for many low- and moderate-income households.
For first-time buyers, the FHSA, HBP and new GST/HST rebate provide valuable support, but buyers still need to manage down payments, mortgage qualification and closing costs carefully.
The biggest long-term issue remains housing supply. CMHC’s estimate of 417,000 , 469,000 annual starts needed to restore pre-pandemic affordability shows that Canada still has a substantial construction challenge.
Overall, Canada’s housing market is showing improving conditions in some areas but significant affordability challenges remain. The future will depend on interest rates, construction costs, population growth, rental supply, ownership housing construction and the effectiveness of government housing policies.
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