CMHC Now Sees Home Prices Declining Through 2026, Delaying Equity Recovery for Existing Owners

The headline revision is straightforward: CMHC expects home prices to decline through 2026 and then grow only modestly afterward, with very slow population growth and limited income gains keeping any increases restrained across the country. In its summer update, CMHC frames 2026 as a year of weak demand rather than a second-half turnaround, with baseline real GDP growth of just 0.7% weighing on confidence, mobility, and buyers' capacity to stretch.

The reasons CMHC gives are worth separating out, because they explain why cheaper homes have not restarted the market. Activity has run weaker than expected this year on a combination of slower population growth, ongoing economic uncertainty, high mortgage rates, and slow income growth. Improved affordability, CMHC notes, has not been enough on its own to bring many buyers back. That is the crux of the delayed-recovery case: lower prices are not a switch that flips demand back on when three or four other constraints are still pressing.

CMHC also named its biggest downside risks, and both sit outside the housing market. It flagged renewed U.S.–Canada trade tension — including a newly announced 50% U.S. tariff move that the Prime Minister's Office addressed days earlier — alongside the U.S.–Iran conflict, which CMHC expects to push inflation up temporarily in 2026. Both channels can suppress hiring, investment, and demand for homes.

CMHC's revision is not an outlier, either. It lands amid a broader wave of downgrades, including TD Economics' own reversal from the growth it had projected in December.

The national baseline table puts numbers on the slow-grind picture:

Prices recover only gradually while starts keep falling — a profile consistent with a weak, extended adjustment, not a snapback.

For existing owners, the number that matters is not this year's sale price but the value cushion sitting between what a home is worth and what is owed on it. The Financial Consumer Agency of Canada defines home equity as the difference between a property's appraised value and the balance on the mortgage, HELOC, and other loans secured against it — and notes that lenders may use that equity to decide how much an owner can borrow, typically up to 80% of a home's value. When appraised value stalls or slips while the mortgage balance stays put, the usable slice narrows.

That is why a delayed price recovery can matter even to someone with no plans to list. An owner counting on near-term appreciation to fund a move-up, a downsize, or a line of credit may simply have to wait longer. HELOCs sharpen the point: they are variable-rate credit generally capped at 65% of a home's value, and federally regulated lenders are expected to hold that line under OSFI's Guideline B-20, with any credit beyond it required to amortize. Soften the value and the ceiling on that borrowing comes down with it.

It is the same dynamic other lenders have started flagging. CIBC's warning that home values are worth less than owners think traces exactly this line from appraised value to HELOC room to household spending.

None of this is a reason to panic. It is a reason to separate two ideas that often get blurred: your home's market value and your borrowing capacity against it move together, and both can drift for reasons that have nothing to do with how well you have maintained the place.

A single national price line is the least useful number for an individual owner, because CMHC's own forecast splits sharply by region. Western Canada is expected to lead growth in 2026, helped by stronger commodity prices tied to the U.S.–Iran conflict, while Central Canada — more exposed to trade risk — is likely to lag. On the housing side specifically, CMHC expects Prairie markets to lead price growth with Quebec posting modest gains from more balanced conditions, while British Columbia and Ontario likely see the weakest growth on slower population inflows, affordability strain, and higher supply.

The regional resale tables make the divergence concrete:

Same national outlook, three different owner experiences: a falling value in a large Ontario market alongside continued gains in Quebec and the Prairies. For Ontario and B.C. owners, that turns into a real hold-or-list question heading into a market where buyers keep the pricing power — the same pressure visible in the GTA's benchmark slipping while listings dropped, thinning the equity cushion. Prairie and Quebec owners are working from firmer ground. The practical read is to time any decision to a regional market, not a national headline.

The renewal calendar is where a soft-price year stops being abstract. Posted rates have not come down to meet it: on the day CMHC published, the prime rate sat at 4.45% and conventional mortgage rates ran from 5.49% on a one-year term to 6.09% on a five-year. The policy rate had been held at 2.25% a week earlier, with the Bank of Canada pointing to the same trade and Middle East risks CMHC cited — a "higher-for-longer" backdrop, not a pivot to cheaper money.

Layer that onto the renewal wave. In its 2026 Financial Stability Report, the Bank of Canada noted that the last of the pandemic-era five-year fixed-payment mortgages — roughly 12% of all outstanding mortgages — would renew over the coming year, with those borrowers facing payment increases of about 15% on average. A payment step-up is hard enough on its own. Pair it with a home whose value has drifted down, and an owner whose loan-to-value has crept up can find less refinancing room precisely when they want more.

That combination — payment shock plus a thinner equity buffer — is already showing up in how owners behave, from the renewers absorbing higher payments in CMHC's own survey work to the growing share simply staying put. It is worth checking your assessed value and mortgage math before a term ends, rather than after.

There is a genuinely encouraging data point in the mix, and it deserves careful reading. National resale prices have begun to steady: CREA reported that its composite price index was unchanged from May to June — the first month without a decline since January 2025 — even as it sat 3.6% below its level a year earlier, with prices still down year over year in British Columbia, Alberta, and Ontario. That is the difference between the floor being found and the losses being recovered, captured in a single release.

The same distinction runs through the June data showing prices had stopped falling month over month without yet climbing back — stabilization is real, but a full recovery is not the same thing.

That gap is the whole point of CMHC's revised timeline. Demand has stayed soft partly because the population base itself has thinned — Statistics Canada estimated Canada's population fell by about 55,000 in early 2026, with Ontario down and non-permanent residents dropping more sharply. Fewer people entering the market means less of the demand that would ordinarily convert a price floor into a rebound.

For owners, the awareness-level takeaway is modest and regional. CMHC's update reads best as a signal to treat 2026 as a hold-and-carry year rather than a rebound year, to plan around your own market instead of the national number, and not to bank on appreciation to rescue a stretched budget. The forecast is a projection, not a certainty — but the direction of the revision, and the timeline behind it, is the part worth planning around.