GTA aggregate home price near $1.1 million in Q1.

National rebound, Toronto lagging

Canada's housing market showed early signs of a national recovery in the first quarter of 2026 even as Toronto stood apart. Royal LePage's House Price Survey and Market Forecast found aggregate home prices across Canada fell 2.0 per cent year-over-year in Q1 2026, but edged up 0.7 per cent from the final quarter of 2025. The firm projects aggregate prices could be about 1.0 per cent higher year-over-year by the summer.

And yet Toronto didn't follow that pattern. The Greater Toronto Area's aggregate price dropped 4.7 per cent year-over-year to $1,091,900 in the first quarter, the report showed. In the City of Toronto specifically, the average home price fell 4.8 per cent to $1,070,600.

The data show a split: other regions are seeing modest gains, but Toronto is still wrestling with weaker demand.

Where the declines hit hardest

Detached houses in Toronto took the biggest hit. Royal LePage reported the average price of a detached home dropped 9.7 per cent year-over-year to $1,528,900 for Q1 2026. Condominiums also eased, with the average condo price down 3.8 per cent to $660,600.

"Elevated supply levels keep conditions balanced," said Shawn Zigelstein, broker at Royal LePage. He added that activity has ticked up slightly in the condo segment because of interest from first-time buyers and downsizers, but overall movement is restrained by sellers holding off.

Zigelstein described a form of gridlock where prospective sellers are relisting later rather than accepting lower offers. And that squeeze on listings has kept the market in a measured state despite some uptick in transactions.

Why Toronto is diverging

Royal LePage blamed a mix of economic worries and geopolitical shocks for slowing housing activity in early 2026. The firm's release mentioned broad economic worries and geopolitical tensions as contributors to the slow start.

Phil Soper, president and chief executive officer of Royal LePage, said buyer hesitation, seller caution and limited inventory in prime areas combined to slow the market. "Nervous first-time buyers, 'sell-before-buy behaviour' and restricted inventory in prime markets" were factors Soper highlighted, according to the report.

Those dynamics help explain why Toronto's average price moved differently from many other Canadian markets. In places where sales rebounded faster or listings were already stretched thin, prices showed small gains. In Toronto, higher inventory in some segments and specific local affordability pressures have kept prices on a softer path.

Inventory and buyer behaviour

The Royal LePage analysis underlines an important trend: sellers are often choosing to remove listings and wait for more favourable offers. When sellers pull listings, there's simply less stock — buyers can't move and turnover falls.

Mastheads

"There's a degree of gridlock with buyers and sellers waiting for more favourable conditions to move forward," Shawn Zigelstein said. He noted that while inventory has generally been abundant relative to the most frenzied periods, many would-be sellers prefer to time the market before relisting.

That pattern keeps activity muted even when headline sales numbers tick higher. It also changes which parts of the market show life — the condo sector, for example, is drawing interest from first-time buyers who are priced out of detached homes.

Rates, inflation and what could nudge buyers

Royal LePage said a rate hike could push some buyers off the fence. The report said the prospect of a rate hike to respond to rising inflation could push some buyers to act sooner than they otherwise would.

But Soper and other Royal LePage analysts also stressed that broader economic concerns remain front of mind for many consumers. Job security and household finances shape decisions as much as mortgage pricing. That makes the timing of any move sensitive to both policy changes and labour-market signals.

So while modest price gains are possible in parts of Canada if conditions stabilise, Toronto's path depends on local inventory shifts, buyer confidence and how mortgage rates move this year.

Forecasts and what they mean for buyers and sellers

Royal LePage offered forward-looking estimates that show continued pressure in Toronto even as some markets recover. The firm expects Toronto prices to keep falling in the second quarter of 2026, albeit at a modest pace. For the GTA as a whole, Royal LePage forecasts the aggregate price of a home will decline 4.5 per cent in the fourth quarter of 2026 compared with the same time in 2025.

If the forecasts hold, Toronto buyers could have more bargaining power than during the pandemic boom. Sellers, meanwhile, face a decision: list now and risk lower offers, or wait in hopes conditions become more favourable. Either way, the market is less one-sided than it was during the peak of price growth.

Analysts say even modest swings in rates, jobs or confidence can flip market momentum. In markets where supply is tight, even a modest uptick in buying activity lifts prices.

In Toronto — where supply and demand look more balanced — these factors will likely affect when people move, not which way prices head.

Regional contrast across Canada

Royal LePage's report shows regional divergence. While Toronto fell back in Q1, other Canadian centres showed early signs of recovery: aggregate prices nationally were marginally higher quarter-over-quarter and the firm expects modest year-over-year gains by the summer.

Local conditions are driving those differences. Housing markets outside Toronto are responding to shifts in migration, employment and differing supply dynamics. Some regions have less inventory and stronger demand, which supports prices. Toronto's mix of product types, from high-priced detached homes to more affordable condos, produces varied outcomes within the same metropolitan area.

The contrast means national headlines about a housing rebound don't automatically apply to every city. Toronto's decline so far this year signals a slower adjustment and a market that's still seeking its footing compared with several other Canadian centres.

What to watch next

Homebuyers and sellers should watch listings and activity in their specific neighbourhoods, not just citywide averages. Pay attention to the condo market if you're a first-time buyer, and monitor detached-home listings if you're selling — those segments are moving differently.

Policymakers and lenders will also be watching inflation and labour-market reports for clues on interest rates. Any central bank action would feed quickly into mortgage costs and buyer urgency.

For now, Royal LePage's read is clear: Canada as a whole is trending toward a modest rebound, but Toronto may still have room to fall before it joins the rest of the country in a sustained upturn.

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Royal LePage forecasts the GTA's aggregate home price will fall 4.5 per cent in Q4 2026 versus Q4 2025.

This article was created with AI assistance.