Canadian housing prices could reach a new record by 2026, driven by unrelenting demand from a growing population, according to an outlook published by the national housing agency on Thursday.

Canada Mortgage and Housing Corp.’s 2024 Housing Market Outlook predicts that while sales fell by a third and prices dropped 15 per cent during the slowdown of the past few years, the period has set the stage for a resurgence.

“During this time, the pool of potential homebuyers grew through robust population growth, increased savings and higher incomes. As mortgage rates and economic uncertainty decrease in the second half of 2024, we expect buyers to start returning to the market,” CMHC said in the report.

Lower interest rates and a stronger economy combined with the strong population growth recorded in 2023 — the highest since the 1950s — are expected to contribute to a recovery in sales, which will include a shift in toward lower-priced homes and markets across Canada.

The report projects that sales levels in 2025 and 2026 will slightly surpass the 10-year average but remain below the record levels seen in 2020 to 2021, as housing continues to be expensive for the average household.

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