Mortgage brokers see little change ahead as tariffs, the Iran conflict, and a likely rate hold weigh on buyer confidence
Canada's housing market is heading into the second half of 2026 on soft footing, with buyer confidence fragile, a Bank of Canada rate hold widely expected, and mortgage brokers anticipating little change in activity through year-end.
A new analysis by Royal Bank of Canada (RBC) Economics characterized homebuyers’ outlook as cautious as the year nears its halfway point.
“The general vibe is one of restraint,” the report said. “[National] home resales remain soft for the most part with markets such as Toronto, Hamilton and Vancouver coming off depressed levels. May’s green shoots must develop further for recoveries to blossom.”
Affordability appeared to be on the up in the early parts of the year in many major markets, although Ratehub.ca has signalled that the trend seemed to reverse in late spring.
One of the main ingredients to a better housing market in the second half of 2026, RBC said, is confidence, “which must significantly rebuild.”
That means progress is needed on the tariff front, Iran war, and labour market outlook – although the latter posted a welcome surprise in early June when Statistics Canada revealed the national economy added 88,000 jobs in May.
Why is the housing market still subdued in 2026?
Mortgage and housing market watchers hoping for a calmer year after the chaos that marked 2025 haven’t had much reason for cheer.
Last year, it was all about tariffs, the trade war, and huge question marks around how the new US administration’s aggression would impact Canada’s economy and housing market.
That uncertainty sent scores of potential homebuyers to the sidelines as would-be mortgage shoppers shelved their purchasing plans amid a darkening economic outlook.
Trade tensions are still lurking unsolved in the background this year – and 2026 has also thrown another unexpected curveball in the outbreak of the US-Israel war on Iran, spiking oil prices and sending fixed mortgage rates sharply higher.
An unusually bitter winter in many parts of Canada kept the housing market subdued in the opening months of the year, and the conflict in Iran has continued that trend even if pockets of activity are emerging across the country.
When will Canada’s housing market recover?
Mortgage brokers aren’t pinning their hopes on a big uptick in market activity in the months ahead, even if the outlook differs from one region to the next.
“I don’t think a lot is going to change for the rest of the year,” Elan Weintraub (pictured top), a Toronto-based broker with Mortgage Outlet, told Canadian Mortgage Professional. “I think real estate is very cloudy and volatile. It’s extremely micro-fragmented.
“Certain pockets might be lukewarm to hot. Other pockets are ice cold. That’s based on geography, condo versus freehold, million-dollar price point versus $4 million versus $500,000. I think appraisers and realtors have an incredibly difficult job because it’s very hard to value properties given how volatile the market is.”
Will the Bank of Canada cut rates in June?
A Bank of Canada rate cut or two might help bring buyers back into the fold, but that doesn’t look likely anytime soon.
The central bank is scheduled to announce its next rate decision on Wednesday (June 10), with a rate hold widely expected as decisionmakers continue to assess how the US-Iran war is impacting the Canadian economy and inflation outlook.
That means variable mortgage rate holders are unlikely to see any relief in the weeks ahead – and prospects for fixed rates are also unclear.
Five-year Government of Canada bond yields, which strongly influenced fixed rates, have inched up over the past week and remain higher than they were a year ago.
The outlook for the housing market isn’t all doom and gloom: RBC sees a potential price turnaround ahead in Toronto if the market’s recent momentum intensifies, while Vancouver is also showing some signs of stabilization.
However, markets that proved resilient even as others cooled in recent years are beginning to regress – especially Calgary and Montreal, two cities that largely avoided the steep drop-off in activity seen elsewhere.
In Toronto, Weintraub sees a steady pace of activity in store for the second half of 2026. “On a broad level, I think it’s going to be a lot of more of the same,” he said.
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