We’re pleased to share our third-quarter market review, offering both regional and national insights. Below are the key findings from our report.

Highlights of Alberta’s housing market:

122,400: The projected population increase over the next two years. This 2.5% increase will bring the total number of residents to nearly 5.1 million by 2027.
$509k: The forecasted average house price in 2025. This is up 2.3% from the average level recorded in 2024.
45,400: The expected number of housing starts in 2025. This is down 5% from the starts registered in 2024.

Canada’s Outlook: Trade-Induced Recession To Last Until End-2025
Recession Likely Began in 2025Q2 and Will Last through End of the Year

Early data is indicating that Canada’s economy entered recession in Q2, driven by the US trade war and related uncertainty. Compared to our March forecast, the recession is expected to be more front- loaded with overall growth for 2025 revised down to 0.8% but recovery starting already in early 2026, supported by new federal government stimulus. Successful UMSCA renegotiation in mid-2026 is projected to result in the removal of most tariffs and promote a sustained recovery Housing Market Will Contract in line with Broader Economy
The national unemployment rate reached 7% in May and is expected to peak at 7.6% in Q3, as 150,000 jobs are lost in sectors both directly and indirectly impacted by tariffs. Higher unemployment will prompt distressed home sales and combine with lower demand from reduced immigration to cause house prices to fall by 8 to 10% from end-2024 levels by end- 2025. A gradual housing market rebound is expected to begin in early 2026 and last until 2028.

Inflation Pressure Is Easing in the Near Term

On April 1, the new Liberal government removed the consumer carbon tax. Moreover, a reduction in the US effective tariff on Canadian goods prompted the Canadian government to remove or pause a large portion of its counter tariffs as of April 15. These two policy changes will result in inflation being much lower than previously expected at 2.2% in 2025 before rising to 2.6% in 2026 as temporary counter tariff exemptions expire.

Mortgage Rates Are Rising among Elevated Uncertainty

We expect the Bank of Canada will continue to hold the policy rate steady for the foreseeable future, as it balances the downside risks to growth from the trade war against the upside risks to inflation from tariffs. However, rising risk premia will likely push government bond yields higher and gradually lift fixed mortgage rates. We thus forecast the five-year conventional mortgage rate will rise from 5.1% in Q2 2025 to about 5.5% by the end of 2025. The housing downturn is expected to deepen until the end of 2025, followed by a gradual recovery
Although sales of existing residential units stabilized in Q2, national unit sales in May were still about 16% below the 5-year average and inventory has reached 5 months. We expect a further slump in turnover of resale housing as job losses lead to more distressed home sales and weigh on demand amid heightened uncertainty, a shrinking population, and rising mortgage rates.
Housing markets in the Prairies should remain relatively more resilient, as these regions continue to see tighter supply-demand conditions than the rest of the country and remain in more affordable territory.

Insightful facts and trends from MPC — valuable information to keep in mind when making financing and housing decisions.

Candace Perko,
Mortgage Broker