The latest housing reports from RBC Economics offer a cautiously optimistic reading of Canada’s real estate market. After several years of sharp affordability deterioration, the data now points to meaningful improvement in some of the country’s most expensive markets. Prices have corrected. Inventory has increased in key regions. Ownership costs have eased from their pandemic-era highs.According to RBC’s April 16 housing market update, March 2026 marked an especially soft start to the spring housing season. Nationally, there were 38,700 home resales in March, unadjusted for seasonality, making it the weakest March in 17 years. On a seasonally adjusted basis, resales declined for the fifth consecutive month, edging 0.1% lower from February. RBC attributed the slowdown to a mix of economic uncertainty, falling prices, and abundant inventory in certain parts of the country.&nbsp;The national composite MLS Home Price Index is now down 4.7% from a year earlier and 20% from its cyclical peak in early 2022. It also slipped another 0.4% from February to March. CREA’s March 2026 data confirms the same national picture: sales were virtually unchanged month-over-month, new listings edged down 0.2%, and the MLS Home Price Index fell 0.4% monthly and 4.7% year-over-year.&nbsp;On paper, this looks like progress. In practice, it is a reset from an extraordinarily strained starting point.RBC’s affordability report shows that its national aggregate affordability measure eased for an eighth consecutive quarter, falling to 52.4% in Q4 2025 from an all-time high of 63% at the end of 2023. In RBC’s methodology, a decline in the measure represents improved affordability. However, the pace of improvement has slowed meaningfully since mid-2025. RBC notes that recent quarterly improvements have moderated to 0.4 percentage points, compared with an average of 1.6 percentage points over the previous year and a half.&nbsp;That is the central tension in the market today. Conditions are better than they were at the peak of the affordability crisis. But better is not the same as comfortable.The improvement is also highly regional. In Ontario and British Columbia, higher inventory has placed downward pressure on prices. RBC reports that active home listings are hovering near decade highs in Ontario and B.C., and for Toronto, the inventory backdrop is even more pronounced. This has intensified competition among sellers and forced greater price concessions in markets where buyers remain cautious and ownership costs are still elevated.The Greater Toronto Area’s MLS HPI was down 7.4% year-over-year, while Greater Vancouver declined 6.8%. The correction has extended across several Southern Ontario markets, including Kitchener-Waterloo at -8.6%, Barrie at -8.4%, Cambridge at -7.4%, Hamilton at -7.3%, London at -7.1%, and Guelph at -6.4%. Alberta has also seen more modest declines, with Edmonton down 2.9% and Calgary down 3.0% year-over-year.&nbsp;In other parts of the country, however, the story is very different. Where supply remains tight, prices are still rising. RBC identified year-over-year MLS HPI gains of 6.3% in Regina, 5.4% in Saskatoon, 2.9% in Winnipeg, 4.9% in Montreal, 10.1% in Quebec City, 11% in Moncton, 3.1% in Halifax, and 9.3% in Newfoundland and Labrador.&nbsp;During the pandemic and immediate post-pandemic period, many local markets appeared to move in the same direction at once. RBC now sees a return to a more traditional pattern, where local supply, local incomes, employment conditions, migration, and buyer confidence shape very different outcomes across the country. RBC says falling home values in the Toronto area have helped restore affordability at one of the fastest rates in Canada. Its aggregate affordability measure for Toronto has declined by 6.9 percentage points over the past year, including an eighth consecutive quarterly improvement in Q4 2025. RBC also notes that Toronto has reversed approximately 80% of the pandemic-era affordability spike, compared with about 52% nationally.&nbsp;And yet, Toronto buyers still need 62.9% of a typical household’s income to cover the cost of owning an average home. That is not a healthy affordability level. It is simply less severe than the market’s previous extreme.&nbsp;This explains why buyers have not rushed back in large numbers. Many households are waiting for further price declines, lower borrowing costs, stronger job security, or some combination of the three. CREA also noted that rising global economic uncertainty and a mid-March jump in fixed mortgage rates weighed on activity at the start of the spring market.&nbsp;RBC’s conclusion is sober. Further meaningful improvement in affordability would likely require either steeper price declines or stronger income growth, neither of which RBC sees as likely under its base case forecasts for 2026 and 2027. That should shift the policy conversation.For years, housing affordability has been discussed primarily through the lens of supply. Supply still matters, particularly in markets where inventory remains tight and prices continue to rise. But in Ontario and British Columbia, where listings have increased and prices have corrected, the problem is no longer just the number of homes available for sale. It is whether households have the income, confidence, and economic stability required to purchase them.A market can have more inventory and still remain unaffordable. A home can fall in price and still be out of reach. A buyer can qualify mathematically and still hesitate because their employment situation feels uncertain or their monthly cost of living has absorbed every bit of theoretical affordability improvement.This is where government policy needs to evolve. Waiting for further price declines is not a housing strategy. Nor is it enough to keep repeating that supply is the only answer. In several key markets, prices have already corrected significantly from pandemic-era excesses. The next phase requires attention to the parts of affordability that governments influence more directly: taxes, employment, productivity, infrastructure efficiency, development charges, and the broader economic environment required to attract higher-paying jobs.The path back to affordability was never going to come from one lever. Lower prices have helped. Higher inventory has helped in some regions. Moderating ownership costs have helped. But the larger challenge remains: Canada needs a housing market supported by stronger household incomes, stronger confidence, and a stronger economic base.The housing correction has arrived. The affordability crisis has not fully left. The next chapter belongs not only to buyers and sellers, but to policymakers. The market has adjusted. Now the economy has to catch up.

RBC Says Canada’s Housing Affordability Is Improving, But Byers Are Cautious.

RBC says Canadian housing affordability is improving, but high ownership costs, weak confidence and uneven supply still keep buyers cautious.

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