The Canadian Real Estate Association has downgraded its forecast for home sales activity in 2026 again, despite a small uptick in the number of homes that changed hands in June.

CREA is now expecting a total of 463,336 residential properties to be sold throughout the year, representing a 1.4 per cent decline from 2025. That marks a reversal from its April forecast of a one per cent gain, which itself was a downgrade from the association’s January prediction of 5.1 per cent growth year-over-year.

The national average home price is forecast to rise 1.1 per cent on an annual basis to $686,710 this year, which would be around $2,000 lower than predicted in the spring.

The association said its revised forecast reflects a weak first half of the year, which included a slightly delayed start to the housing market’s long-awaited recovery. More activity is expected in the second half of the year.

Part of buyers’ hesitation may have been tied to inflation fears from high oil prices, which caused a jump in fixed mortgage rates that have since partially eased. Negative population growth has also weighed on the housing market in some regions more quickly than previously expected.

But CREA said a recovery in home sales appears to have begun in more recent months. It reported national home sales edged up 0.9 per cent in June compared with the same month last year, while activity also ticked 0.5 per cent higher from May.

CREA senior economist Shaun Cathcart said he expects first-time buyers in particular will be keen to move off the sidelines in the back half of the year now that interest rates have stabilized.

The Bank of Canada held its benchmark interest rate steady for the sixth consecutive time on Wednesday as it said it expects the economy to rebound after a rough start to the year.

The central bank’s policy rate remains at 2.25 per cent.

Cathcart called that a “huge milestone” that could spark a turnaround for the housing market.

“Certainly a pattern in the last few years has been a tough start to the year and a stronger finish. That’s what we’re forecasting,” he said in a phone interview.

“If rates aren’t going anywhere and prices aren’t going anywhere, and all these people have been waiting for four years, provided something else doesn’t come along to pull the rug out, I think that there’s scope for it to really surprise us in sort of September, October once all those listings come out after Labour Day.”

TD economist Marc Ercolao said sales levels remain low despite positive signals.

“This reality comes through when observing price trends. Canadian average home prices rose in (the second quarter), but this was on the heels of a weak first-quarter performance, leaving little appreciation, on net, in the first half,” he said in a note.

In June, the national average sale price rose 0.5 per cent compared with a year earlier to $696,078.

CREA’s own home price index, which aims to represent the sale of typical homes, held steady from May to June. The association noted it was the first time the measure didn’t decline on a month-over-month basis since January 2025.

The index dropped 3.6 per cent on a year-over-year basis.

“Moving forward, we think Canadian housing will continue its recovery in the second half of the year, supported by pent-up demand and past affordability improvements in B.C. and Ontario,” said Ercolao.

“However, it will probably take until 2027 for Canadian average prices to turn meaningfully higher given loose supply/demand conditions in B.C. and Ontario, and cooling trends elsewhere in Canada.”

A Re/Max Canada report published earlier this week, which examined detached housing trends across the Greater Toronto Area, Greater Vancouver and Fraser Valley in the first half of this year, found sales for that segment increased in 61 per cent of markets analyzed, compared with the same period in 2025.

Home values remained largely flat, with just six per cent of communities posting price gains.

Re/Max said the findings suggested that the market rebound remains “narrow, selective and far from guaranteed.”

Tim Hill, a Vancouver-based agent with Re/Max All Points Realty, said he also questions how much “pent up” demand there really is.

“Are we talking a volcano eruption? What is there to tell us that could actually happen other than just an optimistic forecast?” Hill said in an interview.

“There’s more buyers out there right now that are willing to take the plunge, but I think it would take a lot to actually see a significant turn.”

Hill said he doubts the market will see a significant shift before the end of the calendar year.

“There’s too many pieces to that puzzle to really see something like that happen in the near future,” he said.

In June, the number of newly listed properties decreased 1.3 per cent month-over-month. A total of 208,578 properties were listed for sale by the end of the month, up 0.6 per cent from a year earlier.

Looking ahead to 2027, CREA said it now forecasts national home sales to improve by 3.7 per cent to 480,567, with the caveat that the figure could be stronger if external factors don’t again disrupt the spring market for a fourth straight year.

The national average home price is expected to rise 1.1 per cent from 2026 to $694,164 next year.

“The housing market doesn’t lead anything, it follows everything else,” said Cathcart.

He said much will depend on stability in the economy, particularly for the labour market, for housing activity to bounce back. But with the war in Iran still unsettled and continued uncertainty related to Canada’s trade relationship with the U.S., Cathcart said it’s tough to map out what could happen.

“It’s this perma-crisis in the 2020s where things keep flaring up and then calming down and then the next thing pops up. It’s been a bit of a roller-coaster,” he said.

“You’ve got interest rates on a roller-coaster, population in Canada on a roller-coaster. I think things just need to settle down.”

This report by The Canadian Press was first published July 15, 2026.

Sammy Hudes, The Canadian Press