Canadian homeowners have lost roughly a fifth of their homes’ value since the market peaked in early 2022, and rising mortgage rates triggered by the war in Iran are threatening to extend the decline just as the market was expected to stabilize.
The MLS Home Price Index Aggregate Composite Benchmark stood at $664,400 in March 2026, down 21% from the $841,300 peak in March 2022 — the largest correction since the early 1990s housing crash. The benchmark has fallen for 16 consecutive months, dropping 4.7% year-over-year. The national average sale price sat at $673,084, down 0.8% from a year earlier.
In just three weeks in March, three- and five-year fixed mortgage rates jumped 0.5% as bond yields spiked after the Strait of Hormuz closure. The five-year fixed rate hit 4.95% in early April — up from roughly 4% weeks earlier.
“Unfortunately, as it pertains to the forecast, we’ve had to change that and lower it because of the situation in the Middle East and the oil shock,” CREA senior economist Shaun Cathcart said. CREA now expects national average prices to rise just 1.5% in 2026 to $688,955 — still roughly $150,000 below the 2022 peak — with any recovery hinging on the oil crisis being short-lived.
The Bank of Canada held at 2.25% on April 29, with Governor Tiff Macklem caught between two contradictory pressures: high oil prices arguing for rate hikes, trade uncertainty arguing for cuts. Housing activity, the Bank noted, “declined in the fourth quarter and is being held back by slow population growth, economic uncertainty and ongoing affordability issues.”
Read: Canadian Home Prices Fall 20% From Peak in Steepest Decline Since 1990s
CMHC estimates 1.4 million mortgages will be renewed by end of 2026 — approximately 23% of all outstanding mortgages. Many were originated in 2021 when the policy rate sat below 1%. Borrowers renewing now face rates three to four times higher, a payment shock already dampening buyer demand.
Toronto and Vancouver are down roughly 7% year-over-year, with condo markets in both cities faring significantly worse than detached homes. Montreal is up approximately 5%. Calgary is essentially flat, supported by energy sector employment. Ontario remains the only region where CREA forecasts further price declines — the province that drove the 2021-22 boom is taking the longest to correct.
Read: Canadian Housing Market Faces Years-Long Price Decline, BMO Economist Warns
Canadian home prices have fallen 21% from their 2022 peak while US prices have continued to climb, approaching 250% of their 2011 baseline. The divergence reflects different rate environments, immigration dynamics, and speculative excess — Canada’s pandemic-era market absorbed more investor activity and corrected more sharply when rates rose.
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