As Canada heads toward 2026, conversations about housing are everywhere. Prices, interest rates, affordability, supply shortages, oversupply fears, immigration, construction slowdowns—headlines move quickly, often without context.
Instead of predictions or bold claims, a more useful approach is to look at the actual data points economists are watching. When those signals are viewed together, they tell a more balanced story about where the housing market stands today and what pressures are likely to shape the next phase.
Below are seven key charts and themes economists are using to understand Canada’s housing market as it moves forward.
1. How This Downturn Compares to Past Housing Cycles
Housing markets move in long cycles, and Canada is no exception. The current downturn began after prices peaked in early 2022. That timing matters because historical comparisons show that recoveries are rarely quick.
In the U.S. housing downturn that followed 2007, prices took nearly ten years to fully recover. Ontario’s early-1990s housing correction followed a similar pattern, with a long period of stagnation before prices eventually surpassed their previous peak.
What stands out today is that Canada is now roughly four years removed from its 2022 peak. Historically, this places the market closer to the middle of a correction than the end. While there have been short-term rebounds, especially in 2023, higher interest rates slowed momentum again.
The takeaway is not that history will repeat exactly, but that recoveries often take longer than expected, even after prices stop falling.
2. Household Growth Versus Housing Supply
For decades, Canada’s housing supply increased at roughly the same pace as household formation. That balance is now changing.
Federal immigration targets are being adjusted, and economists project that household formation could slow significantly over the next two years. At the same time, housing completions remain elevated due to projects that were approved years ago.
When supply grows faster than demand, price pressure tends to soften. This does not mean a housing crash is guaranteed, but it does reduce the urgency that drove bidding wars during previous cycles.
This imbalance is one reason many economists expect affordability to improve gradually through a combination of price stabilization, income growth, or both.
3. A Shift Toward Rental Construction
One of the most notable changes in recent years is the surge in purpose-built rental construction.
In the late 1980s and 1990s, rental construction fell sharply and remained low for decades. Today, rental starts are at levels not seen in generations. Some projects originally planned as condominiums have shifted to rentals due to weaker investor demand and tighter financing conditions.
This shift could ease pressure in rental markets over time, especially if population growth slows as projected. However, many of these units are still expensive to build, which limits how quickly rents can fall.
The result may be more choice and less competition for renters, rather than dramatic rent declines.
4. Inventory Levels in Toronto and Vancouver
Inventory plays a major role in price movement. When listings are scarce, prices tend to rise. When inventory builds, buyers gain leverage.
Toronto’s resale inventory reached record highs in 2024 and 2025, exceeding levels seen in past cycles. This helps explain why prices have struggled to regain momentum despite lower interest rates in some segments.
Vancouver’s inventory also increased, though not to the same historic extremes. The contrast highlights how local market conditions matter, even within the same country.
For prices to rise meaningfully again, inventory would likely need to decline through increased sales activity rather than reduced listings alone.
5. The Rental Supply Wave and Vacancy Rates
Canada is currently experiencing one of the largest rental construction waves in its history, with roughly 180,000 purpose-built rental units under construction nationwide.
This supply is arriving at a time when population growth is expected to slow. Economists suggest that vacancy rates could rise to levels not seen since the 1990s.
Higher vacancy rates generally reduce upward pressure on rents and give tenants more negotiating power. While this does not automatically make housing affordable, it does represent a shift away from the extreme tightness of recent years.
6. Housing Affordability Is Improving, Slowly
Affordability remains one of the most discussed issues in Canadian housing. Measured as the share of household income required to carry ownership costs, affordability peaked in late 2023 at levels worse than those seen in the early 1990s.
Since then, lower mortgage rates and softer prices have improved affordability modestly. Even so, ownership costs remain well above long-term averages.
Economists expect affordability to stabilize rather than improve dramatically through 2026, unless rates fall further or prices decline more than expected.
7. Labor Demand in Construction and Manufacturing
Labor demand offers insight into future construction activity. Job vacancy rates in construction and manufacturing peaked in 2022 and have since fallen toward historical lows.
This suggests weaker demand for new projects and slower investment activity. When fewer projects are launched, housing supply growth eventually slows as well.
While this could tighten supply in the long run, it also reflects current uncertainty among builders and developers.
What These Signals Suggest for 2026
Taken together, these seven charts point to a housing market that is adjusting rather than collapsing.
Prices have come down, affordability has improved slightly, inventory has risen, and rental supply is expanding. At the same time, demand is softer, construction is slowing, and recovery is likely to be uneven across regions and property types.
Rather than a single turning point, the path toward 2026 appears to be one of gradual rebalancing.
For buyers, sellers, renters, and investors alike, the most important takeaway is that housing outcomes depend less on headlines and more on the interaction between supply, demand, interest rates, and income growth over time.
Instead of predictions or bold claims, a more useful approach is to look at the actual data points economists are watching. When those signals are viewed together, they tell a more balanced story about where the housing market stands today and what pressures are likely to shape the next phase.
Below are seven key charts and themes economists are using to understand Canada’s housing market as it moves forward.
1. How This Downturn Compares to Past Housing Cycles
Housing markets move in long cycles, and Canada is no exception. The current downturn began after prices peaked in early 2022. That timing matters because historical comparisons show that recoveries are rarely quick.
In the U.S. housing downturn that followed 2007, prices took nearly ten years to fully recover. Ontario’s early-1990s housing correction followed a similar pattern, with a long period of stagnation before prices eventually surpassed their previous peak.
What stands out today is that Canada is now roughly four years removed from its 2022 peak. Historically, this places the market closer to the middle of a correction than the end. While there have been short-term rebounds, especially in 2023, higher interest rates slowed momentum again.
The takeaway is not that history will repeat exactly, but that recoveries often take longer than expected, even after prices stop falling.
2. Household Growth Versus Housing Supply
For decades, Canada’s housing supply increased at roughly the same pace as household formation. That balance is now changing.
Federal immigration targets are being adjusted, and economists project that household formation could slow significantly over the next two years. At the same time, housing completions remain elevated due to projects that were approved years ago.
When supply grows faster than demand, price pressure tends to soften. This does not mean a housing crash is guaranteed, but it does reduce the urgency that drove bidding wars during previous cycles.
This imbalance is one reason many economists expect affordability to improve gradually through a combination of price stabilization, income growth, or both.
3. A Shift Toward Rental Construction
One of the most notable changes in recent years is the surge in purpose-built rental construction.
In the late 1980s and 1990s, rental construction fell sharply and remained low for decades. Today, rental starts are at levels not seen in generations. Some projects originally planned as condominiums have shifted to rentals due to weaker investor demand and tighter financing conditions.
This shift could ease pressure in rental markets over time, especially if population growth slows as projected. However, many of these units are still expensive to build, which limits how quickly rents can fall.
The result may be more choice and less competition for renters, rather than dramatic rent declines.
4. Inventory Levels in Toronto and Vancouver
Inventory plays a major role in price movement. When listings are scarce, prices tend to rise. When inventory builds, buyers gain leverage.
Toronto’s resale inventory reached record highs in 2024 and 2025, exceeding levels seen in past cycles. This helps explain why prices have struggled to regain momentum despite lower interest rates in some segments.
Vancouver’s inventory also increased, though not to the same historic extremes. The contrast highlights how local market conditions matter, even within the same country.
For prices to rise meaningfully again, inventory would likely need to decline through increased sales activity rather than reduced listings alone.
5. The Rental Supply Wave and Vacancy Rates
Canada is currently experiencing one of the largest rental construction waves in its history, with roughly 180,000 purpose-built rental units under construction nationwide.
This supply is arriving at a time when population growth is expected to slow. Economists suggest that vacancy rates could rise to levels not seen since the 1990s.
Higher vacancy rates generally reduce upward pressure on rents and give tenants more negotiating power. While this does not automatically make housing affordable, it does represent a shift away from the extreme tightness of recent years.
6. Housing Affordability Is Improving, Slowly
Affordability remains one of the most discussed issues in Canadian housing. Measured as the share of household income required to carry ownership costs, affordability peaked in late 2023 at levels worse than those seen in the early 1990s.
Since then, lower mortgage rates and softer prices have improved affordability modestly. Even so, ownership costs remain well above long-term averages.
Economists expect affordability to stabilize rather than improve dramatically through 2026, unless rates fall further or prices decline more than expected.
7. Labor Demand in Construction and Manufacturing
Labor demand offers insight into future construction activity. Job vacancy rates in construction and manufacturing peaked in 2022 and have since fallen toward historical lows.
This suggests weaker demand for new projects and slower investment activity. When fewer projects are launched, housing supply growth eventually slows as well.
While this could tighten supply in the long run, it also reflects current uncertainty among builders and developers.
What These Signals Suggest for 2026
Taken together, these seven charts point to a housing market that is adjusting rather than collapsing.
Prices have come down, affordability has improved slightly, inventory has risen, and rental supply is expanding. At the same time, demand is softer, construction is slowing, and recovery is likely to be uneven across regions and property types.
Rather than a single turning point, the path toward 2026 appears to be one of gradual rebalancing.
For buyers, sellers, renters, and investors alike, the most important takeaway is that housing outcomes depend less on headlines and more on the interaction between supply, demand, interest rates, and income growth over time.
