Higher Bond Yields Weigh on Canada's Housing Market, TD Says

11:45 AM EDT, 09/29/2026 (MT Newswires) -- Canada's housing market is facing renewed pressure from higher global bond yields, with home sales falling in August for the first time in six months amid elevated borrowing costs, TD Economics said in a Tuesday note. TD lifted its forecasts for Canadian bond yields through 2027, while still expecting the Bank of Canada to keep its policy rate unchanged through next year. "Accordingly, our near-term forecasts for growth in Canadian home sales and average home prices have been downgraded," TD Economist Rishi Sondhi wrote. Home sales are forecast to decline by about 5% this year and remain below pre-pandemic levels through 2027, said the bank. Average home prices are expected to be broadly unchanged this year, before rising by less than 2% in 2027. Housing activity is projected to see a modest recovery in 2027, supported by pent-up demand and improving labor markets, but elevated borrowing costs, slower population growth and affordability constraints are expected to keep the rebound limited, added TD. "Perhaps most crucially, this forecast depends on some downdrift in Canadian bond yields beginning in the fourth quarter and lasting through next year," wrote Sondhi. Housing trends are likely to remain uneven across regions, said the bank. Sales are expected to rebound in British Columbia and Ontario but weaken in Quebec. Alberta prices are projected to increase by around 3% this year and next, while stronger price growth is anticipated in Saskatchewan, supported by relatively better affordability. The Atlantic provinces are expected to post modest gains amid high borrowing costs and slower population growth.