Quiet Decline: Toronto Housing Market Starts 2026 Under Pressure

Slow Start: Buyer Activity Slips in Greater Toronto

The Greater Toronto Area (GTA) housing market entered 2026 with notable softness in buyer activity and downward pressure on prices, reflecting lingering effects of the market’s post-boom adjustment. In December 2025, home sales in the region declined approximately 8.9 % year-over-year, and the average selling price dropped over 5 % compared to the previous year, reaching roughly $1,006,735. The number of new listings rose, offering buyers more choice but failing to decisively boost market confidence after prolonged caution among consumers.

According to the Toronto Regional Real Estate Board (TRREB), buyers exercised restraint throughout much of the year due to economic uncertainty and lack of confidence in broader conditions. The increased inventory has created greater negotiating power for buyers, yet clear signs of sustained demand recovery have not materialized.

Why Buyers Are Hesitant: Key Market Headwinds

Multiple factors continue to dampen demand. While lower prices have improved affordability, economic uncertainty and concerns over future mortgage costs are keeping many potential buyers on the sidelines. First-time buyers are showing interest, particularly as investor activity eases in segments like condominiums, but overall demand remains cautious.

This adjustment in prices is part of a broader real estate correction seen in major Canadian cities following the rapid price surge during the early 2020s. Market conditions are now adapting to higher inventory and slower demand growth after years of intense price escalation.

Outlook for Recovery in 2026

Despite the current challenges, industry analysts point to conditions that could support a gradual market stabilization. TRREB leadership has noted that lower mortgage rates and broader housing availability have made the market more accessible, potentially attracting more buyers throughout 2026. However, sustained recovery will depend on improving economic confidence and labour market stability.

If clearer economic signals emerge and buyers regain confidence, demand may slowly return, especially from those currently waiting for more favourable conditions. Otherwise, downward pressure on prices and cautious buyer behaviour may persist.

As International Investment experts report: Toronto’s housing market is transitioning from a seller-dominant phase to a more balanced environment, where increased supply gives buyers leverage, but lingering economic uncertainty continues to influence purchasing decisions.