A new report from RBC Economics says Canada’s housing market appears to be “finally taking steps” toward a recovery.

Home resales have been on a “winning streak since April,” the report said, with inventory levelling off and prices showing signs of stabilizing. There is room for gradual progress going forward, as improved affordability and job prospects lift confidence, it added.

“The key to the outlook will be the extent to which sidelined homebuyers make their way to market,” Robert Hogue, an assistant chief economist at RBC, said in the report.

“We think there could be hundreds of thousands of Canadians who put plans to buy a home on hold in the past several years due to sharp increases in ownership costs. Many of them are living longer than preferred in rented accommodation or delaying upsizing or downsizing current digs.”

The report says the process is unlikely to be smooth or uniform across the country, with prolonged market corrections in Ontario and B.C. having lasting effects on sentiment. In contrast, Hogue said, more resilient areas don’t have much further upside amid steady interest rates and lower population growth.

The condo market is expected to take longer to recover, as high inventory in Toronto and Vancouver along with investor apathy are likely to weigh on prices potentially into next year.

Hogue said the turnaround has come too late to prevent countrywide declines in home resales and prices this year.

Home resales are expected to fall 3.6 per cent this year to 453,200 units, with the benchmark price index declining 2.3 per cent to $794,200 after weak winter and early spring market conditions.

The recovery is believed to be more visible by next year, with Hogue anticipating sales to grow 6.7 per cent to 483,600 units and benchmark home values to rise 0.8 per cent to $800,700.

“An upturn of this magnitude won’t be transformative, while welcome,” the report reads.

“The general tone of Canada’s market will still be soft with our resales projections far below levels before the pandemic and home values just a smidgen above the cyclical low.”

Interest rates are not expected to help affordability, with borrowing costs seemingly “as low as they will get this cycle,” the report said. RBC Economics expects the Bank of Canada to hold interest rates until the end of this year before raising its policy rate next year.

However, the report says a broad turnaround is not a guarantee given certain risks to the Canadian economy.

Specifically, Hogue said recent escalations in the U.S. trade war and conflict in the Middle East could undermine confidence.

“We’ve counted four false starts since 2023, with external events (think trade war or energy price spikes) derailing what promised to be lasting, albeit gradual, improvement. This time may not be different,” Hogue said.

On Aug. 22, the U.S. imposed 50 per cent tariffs on roughly five per cent of Canadian exports and Canada plans to retaliate with its own counter-tariffs starting Sept. 8. U.S. President Donald Trump has also threatened steeper levies on autos and auto parts starting Jan. 1, 2027.

This report by The Canadian Press was first published Sept. 1, 2026.

Daniel Johnson, The Canadian Press