CMHC 2025 Housing Market Outlook
Explore the future of Canada’s housing market based on the latest trends and indicators on new homes, resales and rentals.
Highlights
- Foreign trade risks and immigration changes add significant uncertainty to the outlook. We expect economic activity to be modest in 2025,picking up in 2026 and 2027.
- Housing starts will slow down from 2025 to 2027 mainly due to fewer condominium apartments being built but total starts will remain above their 10-year average. Rental apartment construction will remain high but may slow in 2027 as demand eases. Ground-oriented homes (detached, semi-detached, row homes) may recover slightly, especially in more affordable options like row houses.
- We expect housing sales and prices to rebound as lower mortgage rates and changes to mortgage rules unlock pent-up demand in the short term. In the longer term, stronger economic fundamentals will support this rebound. The recovery will be uneven, with slower progress in less affordable regions and in the condominium apartment market.
- Rental markets are expected to ease with higher vacancy rates slowing rent growth. Renter affordability will improve gradually, with more noticeable changes happening later in the forecast period.
Housing markets
- Affordability improvements release pent-up housing demand, supported by economic recovery later in the forecast.
- Despite the economic headwinds, we expect housing market activity in Canada to improve. The combination of lower mortgage rates and changes to mortgage rules introduced in 2024 should unlock pent-up demand from homebuyers previously priced out of the market. However, some of these homebuyers may face longer loan terms, higher interest costs over the duration of the loan and larger down payments as prices continue to rise.
- Compared to new homes, we expect resale homes to attract a larger share of renewed demand as they offer more options for financially constrained homebuyers. In addition, the length of new construction projects may limit developers’ ability to meet demand quickly.
- Millennials, many of whom are first-time buyers, are currently driving housing demand. As remote work declines, we assume this group will prioritize being closer to jobs, boosting sales recovery in larger urban markets.
- We also expect some repeat homebuyers to return to the market. This will include those looking to upgrade, taking advantage of lower mortgage rates. It also includes homeowners who purchased during the pandemic, facing mortgage renewals between 2025 and 2027. These factors may lead them to rethink their housing needs, driving sales activity.
- Prices will grow faster in 2025, reflecting a recovery and renewed demand for ground-oriented homes, before slowing down in 2026 – 2027.
- The more affordable Alberta and Quebec markets began recovering in early 2024. Sales in these provinces are expected to reach historically high levels, with prices growing faster than national averages during the first half of the forecast period.
Economy
Canada’s economic future faces significant uncertainty due to potential changes in U.S. trade policies and lower immigration levels. Significant uncertainty surrounds the future of U.S. trade tariffs on Canadian exports to the U.S. with the likelihood of Canadian retaliation. This could have a major impact on Canada’s economy as early as 2025, including:
- investment uncertainty
- a weaker Canadian dollar
- lower export revenues
- job losses
- higher inflation
- a greater risk of recession
Candace Perko,
Mortgage Broker
