Canadian Housing Market Update — May 2026: A Cool Spring Continues

2026 continues to be a dispiriting slog for the Canadian housing market.

While April did deliver the year’s first monthly increase in home sales, the numbers weren’t exactly thrilling. Sales edged up 0.7% from a similarly lacklustre March.

There were signs of seasonality, which, while not entirely reassuring, at least signal that the market isn’t broken. Sales should tick up from March to April, as should new listings, which rose a modest 4.1%.

But a market recovery no longer seems probable this year. Sales in the first four months of the year were 6.7% lower versus the same period of 2025. That’s a difference of more than 9,600 transactions.

It’s hard to imagine demand intensifying enough to get sales into the black (not that outdoing a down year like 2025 qualifies as much of a win). There are so many obstacles standing between buyers and the homes they want that it’s hard to identify the primary blocker.

For those ready to transact, it might be mortgage rates. Fixed rates have been driven higher by the war in Iran. As of mid-May, you’d be hard pressed to find advertised three- or five-year fixed rates below 4.6% at Canada’s biggest banks. Add on 2% for the stress test and that’s a major hurdle to get over.

Variable rates are lower, but with the Bank of Canada possibly on the verge of raising its overnight rate, there’s considerable risk involved with going variable and watching your interest rate rise with each BOC rate hike.

For Canadians being thrown off-balance by the cost of living crisis, rates are just one part of the problem. Rising food and gas prices might not factor into mortgage underwriting, but they impact affordability nonetheless. It’s hard to make the numbers work if your monthly cash flow is steadily evaporating.

There’s also the sentiment factor. The vibes, to put it kindly, are not good.

The latest MNP Consumer Debt Index found that 84% of Canadians are cautious about taking on new debt due to ongoing cost pressures and uncertainty. Sixty-nine percent said they are delaying major financial decisions because of unpredictable conditions.

So for home sales to increase, we need to see stability in the economy, lower mortgage rates and declining everyday costs. All at the same time.

Sounds like quite a wishlist, doesn’t it?

Housing market winners and losers in April

The bright spots were few and far between last month. On a monthly basis, home sales increased in just three provinces:

Since PEI’s huge percentage gain works out to only 25 additional sales, let’s focus on Alberta and Ontario, two provinces that have been in our “loser” category for most of 2026.

Homes aren’t cheap in either region, so seeing activity ramp up in both is encouraging. Ontario’s performance in April is especially notable in that sales increased both monthly and year-over-year. Sales in Alberta were down more than 8% versus April 2025.

Sales in Ontario have now increased two months in a row. A combination of low variable mortgage rates and soft home prices could help the provincial market generate additional momentum in May and June.

Home sales fell in every other province, though the monthly declines were generally modest:

For many of these provinces, sales could be falling due to strong sales in 2025 that eroded inventory. For Newfoundland, Quebec, Saskatchewan and Manitoba, that’s most likely the case.

For B.C. and Nova Scotia, the declines may be more a matter of current economic conditions, specifically high home values and/or rising living costs. (And in case you weren’t aware that home values in Nova Scotia qualify as “high”, the average sale price there in April was over $515,000.)

Canadian home prices in April

Here’s how prices behaved in some of Canada’s biggest housing markets last month.

All percentages indicate year-over-year changes in the MLS Home Price Index benchmark price, the Canadian Real Estate Association’s preferred home price metric.

When you zoom out for a three-year comparison, only two cities on this list have negative price growth: Vancouver and Toronto. The others range from an increase of 8.3% (Calgary) to 17.2% (Montreal).

That says a lot about how inflated prices are in Canada’s two biggest markets. They might have to fall even further before sales there get back to normal.