The Canada Mortgage and Housing Corporation (CMHC) says Alberta and Quebec will see historically high levels of home sales, with prices increasing faster than national averages, in 2025 and 2026.
In its Housing Market Outlook, released on Thursday and covering the period between 2025 and 2027, CMHC also expects national housing starts to slow over the same period, while still remaining above the 10-year average.
“The slowdown is primarily due to fewer condominium apartments being built,” says the report. “With low investor interest and more young families looking for family-friendly homes, developers will find it harder to sell enough units to fund new projects.”
The result will be a pullback in new projects getting started, leading to less new condominium apartment construction, but regional activity will vary.
In Ontario, CMHC says pre-construction condominium apartments, which have been supported primarily by investors, will see lower demand due to weaker resale and rental markets, leading to new construction slowing down.
CMHC also expects the investor pool in BC to shrink, which, when combined with a stronger resale market, will delay the start of condominium apartment projects.
In Alberta, where more buyers are residents of the properties purchased, CMHC says the impact on new construction will be minimal.
In terms of housing affordability, markets in Ontario and BC are particularly unaffordable, says CMHC.
“We expect sales in these markets to remain below their 10-year averages, due to ongoing affordability challenges and the more notable impact of new immigration targets. We expect prices to grow more slowly in these provinces, especially in the first half of the forecast period."
“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.”
With a slowdown in new construction in its forecast, CMHC expects an uplift in the resale market.
“We expect resale homes to attract a larger share of renewed demand as they offer more options for financially constrained homebuyers,” says the report. “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 now driving housing demand.
“As remote work declines, we assume this group will prioritize being closer to jobs, boosting sales recovery in larger urban markets,” says CMHC. “We also expect some repeat homebuyers to return to the market. This will include those looking to upgrade, taking advantage of lower mortgage rates, as well as 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."
The supply of homes for sale will increase, says CMHC.
“We expect listings to continue to increase, driven by record new condominium apartment completions in 2025 and softening rental markets,” says the report. “Prices will grow faster in 2025, reflecting a recovery and renewed demand for ground-oriented homes, before slowing down in 2026-2027.”
Any pent-up demand for homes should be met by 2027.
“Although mortgage payments and prices will rise, improved job markets and income growth will make housing more attainable than during the 2022-2024 period,” says CMHC. “This will support further recovery in sales.”
In the rental market, construction set records last year, due to government support, as well as a growing renter population and increasing rents, says CMHC.
“We expect this momentum to continue through 2025-2026, supported by numerous projects set to start. However, softening rental market conditions may lead to fewer rental projects starting by 2027.”
Overall, the agency expects a small recovery in ground-oriented home construction, led by lower-priced options.
“First-time buyers may prefer resale homes that offer better supply,” says CMHC. “Developers will be limited in their ability to compete with these resale markets due to high costs and lower profits. Regionally, new construction in Quebec will recover from recent lows. In Alberta, new construction will slow down from high levels.”