Shaun Cathcart, senior economist at CREA, joins BNN Bloomberg to assess pent-up demand in real estate.

Canada’s housing market began 2026 on softer footing, with benchmark home prices falling to their lowest level in almost five years as sales activity declined in January.

BNN Bloomberg spoke with Shaun Cathcart, senior economist at the Canadian Real Estate Association, who said heavy snowfall in parts of Ontario weighed on transactions and added that a potential return of first-time buyers later this year could help stabilize conditions.

Key TakeawaysNational home sales declined 5.8 per cent month over month in January, while activity was 16.2 per cent lower than a year earlier on an unadjusted basis.The MLS Home Price Index fell 0.9 per cent from December and was down 4.9 per cent year over year, bringing the benchmark price to its lowest level in almost five years.The actual national average sale price slipped 2.6 per cent compared with January 2025, reflecting broad-based price softness across several regions.New listings rose 7.3 per cent month over month, pushing the sales-to-new-listings ratio down to 45 per cent, near the low end of balanced market conditions.Weakness was concentrated in Ontario amid severe winter storms, while regional price growth is expected to slow elsewhere and condos may remain under pressure in 2026.Shaun Cathcart, senior economist at CREA Shaun Cathcart, senior economist at CREA

Read the full transcript below:

ROGER: In January, the benchmark home price fell to its lowest level in almost five years, according to a new report from the Canadian Real Estate Association. Here to break it down is Shaun Cathcart, senior economist at CREA. Shaun, thanks very much for joining us.

SHAUN: Hi, Roger.

ROGER: Another troubling report, I guess. Are we near the bottom, or is there still more room?

SHAUN: I think we’re probably at the bottom on the sales side of things because that was really depressed by the snowfall in Ontario. On the price side, I think we’ve probably got a little bit further to melt, just to continue the snow theme there. But the lowest since spring-summer of 2021, that would have been true in every month last year as well. We’ve had this sort of slow melt. It really, if you look at where prices are today, was really that initial COVID increase from early 2020 to the summer of 2021 kind of made sense. We expected that anyway in those years. It just happened a lot faster during COVID, and then it took that next leg up through spring of 2022 that didn’t really make a lot of sense, and that’s what’s been given back over the last three years of high interest rates and the economic uncertainty of the last year. But if demand comes back, particularly from first-time buyers this year, as we expect it will, I definitely think that’s going to stabilize.

ROGER: Yeah, is this essentially more of almost a normalizing of the prices after that? I mean, nothing was normal during the pandemic and what followed for that last little while. Is this almost a return to more normal prices?

SHAUN: It’s definitely a return to, well, I mean, in terms of affordability, no. Affordability is still strained compared to what a historical average would be, but certainly some of the prices that were justified in late 2021 and early 2022 by the interest rates of that time period are not prices that can withstand mortgage rates of four per cent, and so it takes a long time to sort of melt back down. I think we are close to stabilizing, and most of that weakness now is concentrated in Ontario. And so what our forecast really is, is for Ontario and B.C. to sort of stabilize this year, whereas a lot of those hot markets that had benefited from record population growth that they no longer have, we expect those to sort of settle down. There’s a convergence regionally, and we think that the story in 2026 is going to be by property type, and the condo market is going to continue to struggle. It’s competing with a flood of new purpose-built rental apartments and a major decline in rental demand from slower population growth. But we also have the biggest demographic group in the history of Canada, 25- to 40-year-olds, who’ve been locked out of the market for four years, who we think are going to come back. Four per cent mortgage rates might not be what they would like to get, but that’s also at a bottom per the Bank of Canada. So I think give it a few months, and you’re going to start to see those 30-somethings show up looking to buy that first house.

ROGER: And I mean, four per cent is probably an average. It’s probably even a little below the average over the last 40 or 50 years. We just got so used to hearing 1.9 and two per cent.

SHAUN: Yeah, exactly. But that’s where we’re going to be. If you look at the Bank of Canada’s policy rate, they’re actually at the lower end of what they consider neutral. And so unless we are looking at a recession or some major deflationary forces or disinflationary forces, which it doesn’t really look like that’s going to happen, we’re probably about where we’re going to be. And so the last 15 years of getting a neutral mortgage rate that starts with a two or a three are over, and the Bank of Canada has said as much, and bond markets agree. And so for any buyers that have been waiting and waiting and waiting, saying, I’m not going to lock in a five-year rate until it’s at the bottom, that’s now.

ROGER: All right, we didn’t really get into the numbers off the top. Let’s talk a little bit about which markets took the biggest hit and which ones you think are ready to rebound. I mean, because we do have some interesting factors. We have that almost negative population growth or zero population growth or minimal growth playing in with the fact people do eventually have to move. Which areas took the biggest hit, and where do you see the rebound coming?

SHAUN: Well, in January, it was definitely southwestern Ontario and the Greater Golden Horseshoe because people were under two feet of snow. So January is one of those months that is more noise than signal, and because that’s a logistical reason for the drop in demand, not a fundamental one, it’s the old toothpaste tube, right? What gets squeezed out of January is likely to show up later. So I think that we’re going to continue to see the biggest rebound in activity and people coming back into the market this year in Ontario. That was the case through the entire second half of last year. Of course, the reason for that is that Ontario has the most room to rebound. In other words, they were starting from the lowest starting point, and that’s going to be followed by B.C. B.C. obviously hasn’t been as depressed as Ontario because Vancouver really hasn’t been all that much impacted by high interest rates because properties there, especially ground-oriented ones, are not the kind of thing that people take out mortgages to buy. You sort of have to have five million bucks, right? And then everywhere else, these hot markets, Alberta’s already slowed way down. Saskatchewan is slowing down. Manitoba, Quebec is still on fire, and the East Coast is still doing pretty well, but all of them are slowing down. So from six, seven, eight per cent year-over-year price growth last year, we’re expecting for those to be more like three, four or five per cent this year. So that’s a major slowdown, still moving in the upward direction because there still is a lot of demand for housing in places where you can get a detached house that’s in the $300,000 and $400,000 range.

ROGER: Now, are we seeing pressure on some of those areas that maybe people went to during the pandemic, the work-from-home and all that? Now we’re getting this pressure for everybody to come back to work. Are we seeing people having to move distances because they thought they were going to stay work-from-home forever?

SHAUN: There might be some of that. Initially in COVID, it was, I don’t have to commute anymore, so I’m going to move somewhere. And then as people started to be called back into the office, you had a second wave of people leaving who were more in the sort of late 50s, early 60s range, who said, I’m not going to commute back into downtown Toronto, and they’re living out in Nova Scotia now. And then you’ve got another wave of young people who continue to move out in search of a family-sized home that they can buy and own on the ground, which is not possible for a lot of people, maybe a majority of young people in and around the Lower Mainland and GTA, because housing is just too expensive unless you’ve got a gift from the Bank of Mom and Dad, which is becoming increasingly common. It’s a trend we’ve been watching for 15 years. It used to be from Toronto to Guelph, and then it was Toronto to London, and then it was Toronto to Calgary, and maybe today it’s Toronto to Regina, but people are moving around, and that’s driving up prices in those other places, so that we’re sort of getting an equalization where we’re not going to have very many CMAs left where you can get a regular family home for under half a million bucks, but we’re still in the midst of that same trend.

ROGER: All right, we have to wrap things up there. Thanks very much for joining us.

SHAUN: Anytime.

ROGER: Shaun Cathcart, senior economist at CREA.

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This BNN Bloomberg summary and transcript of the Feb. 18, 2026 interview with Shaun Cathcart are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.