House gross sales are gaining traction once more after a tough winter and spring. July marked the fourth straight month-to-month improve, with nationwide exercise up 3.8% from June and greater than 11% above March lows. The Larger Toronto Space has been a key driver, the place transactions have surged 35.5% over that stretch.

Regardless of these indicators of renewed momentum, RBC Economics cautions that the restoration will likely be uneven. Its newest forecast tasks nationwide resales will fall 3.5% this 12 months earlier than rebounding in 2026, whereas costs are anticipated to slide subsequent 12 months below the burden of Ontario and B.C.’s excessive inventories.

“Encouragingly, current indicators of an ongoing restoration have emerged,” stated Robert Hogue, assistant chief economist at RBC. “Potential consumers are re-entering the market as financial fears ease and decrease rates of interest achieve traction. We anticipate this gradual restoration to proceed within the second half of 2025, setting the stage for stronger demand in 2026.”

Brighter outlook for 2026

RBC sees resales rebounding 7.9% subsequent 12 months to 504,100 items, greater than offsetting this 12 months’s decline however nonetheless falling in need of pre-pandemic norms. The forecast requires bettering job situations and decrease borrowing prices to assist convey extra consumers again, though affordability pressures will cap how far demand can run.

The unemployment charge is predicted to peak at 7.1% later this 12 months earlier than easing in 2026, giving households extra confidence to make longer-term commitments like residence purchases.

Costs below stress in key markets

Nationwide costs are anticipated to edge up by 0.7% this 12 months, however RBC says these positive aspects are front-loaded. It tasks a 0.7% decline in 2026 as Ontario and B.C. proceed to face decade-high ranges of provide and robust competitors amongst sellers.

“Till then, sturdy competitors amongst sellers will doubtless preserve costs below stress with declines persevering with into early 2026 earlier than steadying,” Hogue famous.

In distinction, tighter markets in Quebec, the Prairies and elements of Atlantic Canada are anticipated to see modest worth will increase over the subsequent two years.

Structural challenges linger

Whereas decrease rates of interest have helped convey possession prices to their most inexpensive degree in three years, RBC says affordability stays properly above pre-pandemic ranges within the nation’s priciest markets.

Hogue provides that the Financial institution of Canada’s charge cuts since mid-2024 “have but to totally play out,” with final fall’s restoration reduce quick by the commerce warfare. He expects momentum to renew as borrowing prices filter by way of, however doesn’t anticipate additional stimulus, with RBC’s forecast calling for the coverage charge to carry at 2.75% by way of 2026 and longer-term charges drifting larger as markets reduce expectations for extra easing.

Demographic shifts are additionally anticipated to weigh on demand, with decreased immigration targets slowing family formation and preserving investor exercise muted in main city centres.

In keeping with RBC, the softness displays a correction from the pandemic growth. Rock-bottom charges, earnings helps and shifting housing wants pulled demand ahead, leaving the market to regularly settle again into steadiness.