CREA has lowered its 2026 home sales forecast again, and the reason is not complicated: borrowing costs are making buyers hesitate.

According to Canadian Press reporting carried by Canadian Mortgage Trends, CREA now expects 444,530 homes to sell across Canada in 2026. That would be a 5.2 per cent drop from 2025. Back in January, CREA was still calling for sales growth. By July, the forecast had already turned negative. Now it has been cut for the third time this year.

The price forecast has also been trimmed. CREA now expects the national average sale price to rise just 0.2 per cent this year to $681,681, about $5,000 lower than its July projection.

That does not mean every local market is doing the same thing. These are national numbers, not GTA, Peel, Mississauga, Brampton, or Caledon forecasts. But they do tell us something useful about buyer psychology across the country.

The National Market Lost Momentum in September

September was not a collapse, but it was a step back.

National sales were down 7.7 per cent compared with September last year, and down 2.3 per cent from August. The national average sale price also slipped 1.6 per cent year over year to $666,538.

CREA’s home price index, which is designed to track a more typical home than the raw average price, was down 0.4 per cent from August and 3.4 per cent from a year earlier.

Listings also tell part of the story. New listings were down 1.8 per cent month over month, while total properties listed for sale at the end of September were just above 200,000, up 1.8 per cent from last year.

So we are not looking at one clean headline. Sales are softer. Prices are under pressure. Inventory is not disappearing. Buyers are cautious, and some sellers are still waiting for demand to return.

Mortgage Rates Are Doing Most of the Damage

The biggest issue is uncertainty around rates.

CREA pointed to higher fixed mortgage rates, questions around variable rates, inflation risk, and a more cautious Bank of Canada tone. TD economist Rishi Sondhi, quoted in the Canadian Press piece, also pointed to borrowing costs as the main force behind September’s weaker sales and pricing.

That lines up with what borrowers are feeling. Fixed rates can move before the Bank of Canada does because they are tied more closely to bond yields. Variable rates are tied more directly to the Bank of Canada’s policy rate, which means a potential rate hike can quickly change the conversation for anyone considering an adjustable payment.

For buyers, that creates a waiting game. If rates might rise, some people rush to lock something in. Others step back because the payment no longer feels comfortable. Both reactions can happen at the same time, which is part of why the market feels uneven.

A buyer might still want the house. They may still have the income. But if the monthly payment moves by a few hundred dollars because rates changed, that can be enough to pause the search.

Why Some Sellers May Feel Stuck

One broker quoted in the Canadian Press report described the fall market as shorter than expected, with some buyers having already made their move earlier to secure a rate.

That leaves a certain group of sellers in a harder position. They listed expecting fall activity, but now they may be dealing with fewer showings, slower offers, and buyers who feel less urgency.

This is where pricing matters. A seller who is anchored to last spring’s expectation may not get the result they want if buyers are using today’s rates to calculate affordability. The listing price is only one part of the decision. The buyer is also looking at monthly payment, closing costs, land transfer tax, insurance, and how much room they have if rates or expenses change again.

That does not mean sellers need to panic. It does mean the strategy has to match the current buyer mindset. If the market is cautious, overpricing usually just creates more time on market, and time on market can weaken negotiating power later.

What Buyers Should Take From This

For buyers, a softer national forecast can sound like an invitation to wait. Sometimes waiting makes sense. But waiting without a plan is different from waiting strategically.

If you are hoping prices soften further, you still need to know what your financing looks like. A lower purchase price does not always mean a lower monthly payment if the mortgage rate moves against you. That is the part buyers sometimes miss.

Run the numbers at today’s rate, then run them higher. Look at what happens if the fixed rate you were quoted changes, or if a variable-rate option becomes less attractive because the Bank of Canada moves again.

This is especially important for first-time buyers who are already stretching. The goal is not just to get approved. The goal is to buy something you can carry without every rate headline becoming a personal emergency.

What Renewing Homeowners Should Watch

This report is not only for buyers and sellers. It matters for renewing homeowners too.

If rate uncertainty is affecting national sales, it is also affecting renewal decisions. A homeowner coming up for renewal may be looking at a very different payment than they had a few years ago. They may also be deciding between locking in, taking a shorter term, choosing variable, or switching lenders.

The key is to start early. A renewal offer from your current lender may be convenient, but it is not automatically the best fit. Terms, penalties, prepayment options, and flexibility all matter, not just the posted rate.

And because CREA’s numbers are national, homeowners should avoid applying the headline too broadly. Your local market, your equity position, your income, and your renewal date matter more than the national average.

**The takeaway:** CREA’s downgraded forecast is really a confidence story. Buyers are not only asking what a home costs, they are asking what the mortgage might cost next month, next year, and at renewal. Until that rate picture feels clearer, expect more caution on both sides of the table.