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Canadian Housing Market Cools for Sixth Consecutive Month

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  Published in House and Home on Sunday, February 15th 2026 at 11:18 GMT by Toronto Star
      Locales: Ontario, British Columbia, Alberta, Quebec, CANADA

Toronto, Ontario - February 15, 2026 - The Canadian housing market demonstrated further signs of cooling in January, with sales figures dropping for the sixth consecutive month, according to the Canadian Mortgage and Housing Corporation (CMHC). This continued decline suggests a significant shift away from the frenzied activity seen throughout much of 2021 and 2022, and points towards a potential stabilization of prices after a period of rapid growth.

The CMHC reported a 2.3% decrease in home sales compared to December 2025. More significantly, sales are down a substantial 18.6% year-over-year, when measured against January 2023. This marks a clear trend of diminishing demand and a growing hesitancy among potential buyers.

Interest Rate Impact and Inflation's Role

The primary driver behind this cooling trend is widely attributed to the Bank of Canada's aggressive monetary policy. Repeated interest rate hikes, implemented over the past two years in an effort to curb inflation, have directly impacted affordability and dampened buyer enthusiasm. While inflation has indeed begun to moderate, the higher borrowing costs associated with increased interest rates have created a significant headwind for the housing market.

"The impact of higher interest rates is undeniable," explains Dr. Anya Sharma, a leading economist specializing in the Canadian real estate sector. "Prospective homebuyers are facing significantly higher mortgage payments, which is forcing many to reconsider their purchasing plans or postpone them indefinitely. This is particularly true for first-time buyers who are heavily reliant on mortgage financing."

Average Prices Show Mixed Signals

The average home price across Canada in January was recorded at $713,900. While this represents a slight increase of 1.1% compared to December, it is important to note that this uptick is likely due to seasonal factors and regional variations rather than a widespread resurgence in demand. Year-over-year, the average price remains down 4.5%, falling from $747,000 in January 2023.

Regional Disparities

The cooling trend isn't uniform across the country. Major metropolitan areas like Toronto and Vancouver, which experienced the most dramatic price increases during the pandemic, are now seeing the most significant corrections. Prairie provinces, particularly Alberta, have demonstrated more resilience, fueled by interprovincial migration and relatively strong economic conditions. The Maritime provinces are also showing signs of relative stability, though volumes remain lower than national averages.

Robert Hogue, assistant chief economist at CMHC, anticipates a more balanced market environment moving forward. "We expect to see fewer bidding wars and a gradual stabilization of prices," Hogue stated. "However, the extent of the correction will depend heavily on the future trajectory of interest rates and overall economic conditions."

Looking Ahead: What to Expect in 2026

Experts predict that the Canadian housing market will likely remain in a state of flux throughout 2026. The Bank of Canada is expected to hold interest rates steady for the first half of the year, with potential for modest cuts later in the year if inflation continues to fall. This could provide some relief to buyers and stimulate demand, but a return to the booming conditions of 2021-2022 seems unlikely.

The supply of homes remains a critical factor. Despite the slowdown in sales, inventory levels are still relatively low in many areas, which could limit the extent of price declines. Increased construction of new homes is needed to address the long-term housing shortage, but supply chain issues and labor shortages continue to pose challenges.

Furthermore, demographic trends - including continued population growth and increased urbanization - will continue to underpin demand for housing in the long term. However, affordability will remain a major concern, particularly for younger generations. Government policies aimed at increasing housing supply and addressing affordability challenges will be crucial in shaping the future of the Canadian housing market.

The CMHC will continue to monitor the market closely and provide regular updates on sales, prices, and inventory levels. For prospective buyers and sellers, staying informed about these trends is essential for making sound financial decisions.