Canada’s housing market took a “small step” toward recovery last month, according to a Royal Bank of Canada (RBC) report, but a sustained rebound is yet to be seen.
July’s Monthly Housing Market Update, published by RBC Economics on Wednesday, suggested that the Canadian real estate market remains in the midst of a modest recovery that “appears to be holding — albeit just barely.”
“A 0.5 per cent rise in home resales in June from May extended the winning streak to three months, but marks a sharp deceleration from the robust 5.5 per cent advance the previous month,” RBC’s assistant chief economist, Robert Hogue, wrote in the report.
When seasonally adjusted and annualized, total transactions across Canada last month were 12 per cent below the 10-year average, Hogue wrote.
“There’s a long road ahead in the recovery,” he said.
Home sales expected to decline
On Wednesday, the Canadian Real Estate Association once again downgraded its forecast for home sales in 2026, now expecting a total of 463,336 residential properties to be sold this year, which would be a 1.4 per cent decline from 2025.
Meanwhile, the association predicts that the national average home price will rise 1.1 per cent on an annual basis to $686,710; around $2,000 lower than was forecast in the spring.
RBC’s report noted that inventories have shown signs of stabilization in recent months, particularly in Ontario and B.C., where active listings reached levels not seen in decades.
“Seller competition is beginning to ease as a result in some softer markets,” Hogue wrote.
“There are signs that rebalancing negotiating power could be steadying home values in parts of Southern Ontario, including the Greater Toronto Area (GTA).”
Although June home prices rose month-over-month in a number of areas across the province including the GTA, Hamilton and Windsor, “prices continue to be well below what they were a year ago in almost all Ontario markets,” Hogue explained.
Buyers remain hesitant
In other parts of the country, RBC says housing market trends “are little changed for the most part.”
“Home values continue to appreciate in Saskatchewan, Manitoba, Quebec, and some Atlantic Canada markets, reflecting balanced or tight supply and demand,” Hogue wrote.
Regardless of regional trends, many prospective homebuyers across the country remain “hesitant” to enter the market, the report noted, with challenges such as weakened economic confidence, uncertain job prospects and affordability concerns top of mind.
Convincing those would-be buyers to come off the sidelines will be key to the recovery of the market as a whole, RBC said.
“We expect a gradual, but uneven path forward for Canada’s housing market. We see lower prices in some areas, improving affordability and better job prospects slowly unlocking pent-up demand, bringing more buyers to market and draining some inventory,” wrote Hogue.
“But there continues to be a risk that gloom arising from geopolitical events, another energy price spike, or renewed job market deterioration prolongs the slump.”
