Canadian real GDP fell by 0.1 per cent in March, after growing by 0.2 per cent in February. Goods-producing industries contracted by 0.8 per cent, partially offset by service-producing sectors edging up by 0.1 per cent. Sectoral growth was led by wholesale trade (1.8 per cent), while the biggest detractors to growth came from mining, quarrying, and oil and gas extraction (-2.1 per cent), forestry and agriculture (-1.1 per cent), and construction (-0.6 per cent). Output for the offices of real-estate agents and brokers fell by 0.9 per cent month-over-month. Preliminary estimates suggest that real GDP by industry increased by 0.4 per cent in April.
     
Real GDP was largely unchanged in the first quarter of 2026, registering an annualized growth rate of -0.1 per cent. Contraction was driven by an uptick in imports and continued weakness in business capital investment. Household spending remains resilient, rising by rose 0.4 per cent in Q1, driven by higher expenditures on food and financial services. Total capital investment decreased by 1.1 per cent, as previous public spending on defense systems and private investment. Meanwhile, business investment declined by 0.7 per cent, marking a fifth consecutive quarter of contraction. However, investments into both residential and non-residential structures fell by 2.0 and 0.8 per cent, respectively. The household savings rate slowed to 3.5 per cent, as disposable income growth was outpaced by nominal spending by 0.3 per cent, bringing the overall saving rate to its lowest level since the first quarter of 2024. 

Canada’s economic performance in Q1 marks a second consecutive quarter of annualized growth dipping below 0 for a second straight quarter, sharply underperforming the Bank’s projection of 1.5 per cent growth. Behind the headline number, increases in imports was the largest drag on growth, while final domestic demand also weakened. Household spending remains fairly robust, with income growth being outpaced by consumption. While a slowdown in government spending was expected after purchasing new weapons systems last year, private residential spending has contracted by over 2 per cent in each of the last two quarters, reflective of weak resale activity throughout the country. Taken together, while a gold-driven surge of imports is likely an anomalous headwind, further weakening of domestic demand is worth note, and will likely need to improve looking ahead for Canada to avoid a third straight contracting quarter. Absent the Iran conflict, the Bank of Canada would likely lower its policy rate to address downturns in both the economy and labour market. However, its decisions will be largely dictated by the severity of the price shock on Canadian inflation. Overall, we tentatively expect another rate hold from the Bank in June.

     
For more information regarding British Columbia's GDP growth, please visit our Nowcast for an estimate of economic activity throughout the province: 

BCREA Nowcast - British Columbia Real Estate Association

Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.8 per cent on a year-over-year basis in April, following a 2.4 per cent increase in March. On a seasonally adjusted monthly basis, the CPI was up 0.3 per cent in April, equivalent to a 3.7 per cent increase on an annualized basis. The CPI ex-gasoline increased by 2.0 per cent in April, down from 2.2 per cent in the previous month. Additionally, food prices overall increased by 3.5 per cent year-over-year, down from 4.0 per cent in March. In BC, consumer prices rose 2.5 per cent year-over-year in April, matching the increase from March. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, rose by 2.1 per cent and 2.0 per cent year-over-year, respectively. 
 
As many expected, the ongoing Iranian conflict and its shock to global oil supply is placing upward pressure on headline inflation. Nonetheless, the CPI excluding gasoline has decelerated over the past two months, while 3-month annualized core inflation remains below the Bank of Canada’s target, sitting at about 1.8 per cent. With core inflation and the labour market remaining soft, we tentatively expect a fifth consecutive rate hold in June, as the Bank assesses the depth of the oil shock on headline inflation as well as other intermediate and final goods which are constrained by the conflict.

Canadian housing starts increased 17 per cent from the previous month, totalling 279,317 units in April at a seasonally adjusted annual rate (SAAR).Starts were down 1 per cent from the same month last year (SAAR). In areas with 10,000 or more residents, single-detached housing starts decreased by 19 per cent year-over-year, while multi-family and other starts increased by 3 per cent compared to April 2025

In British Columbia, starts rose by 88 per cent from last month to 57,640 units (SAAR) in all areas of the province. In areas of the province with 10,000 or more residents, single-detached starts decreased by 26 per cent to 3,156 units, while multi-family starts rose by 116 per cent to 52,041 units month-over-month (SAAR). Starts in the province were 5 per cent above the levels from April 2025 (SAAR). Year-to-date starts are up 142 per cent in Nanaimo, 55 per cent in Victoria, and 12 per cent in Vancouver, but down 71 per cent in Abbotsford and 6 per cent in Kelowna.

Vancouver, BC – May 11, 2026. The British Columbia Real Estate Association (BCREA) reports that 6,311 residential unit sales were recorded in Multiple Listing Service^® (MLS^®) Systems in April 2026, down 1.9 per cent from April 2025. The average MLS^® residential price in BC in April 2026 was up 0.8 per cent at $952,768 compared to $944,796 in April 2025.

Total MLS^® residential sales dollar volume was $6.01 billion, down 1.1 per cent from the same time the previous year. BC MLS^® unit sales were 25.38 per cent lower than the ten-year average for the month of April.

“Challenges in the local economy and labour market, combined with upward pressure on rates due to the ongoing oil supply shock, are continuing to suppress pent-up demand and weaken overall market activity,” said BCREA Chief Economist Brendon Ogmundson. “However, modest monthly gains (seasonally adjusted) in some regions hopefully depict the beginning of a broader stabilization in housing activity, underpinned by improved affordability conditions that should encourage prospective buyers to enter the market.”

Year-to-date, BC residential sales dollar volume is down 9.5 per cent to $18.7 billion, compared with the same period in 2025. Residential unit sales are down 7.6 per cent year-over-year at 20,059 units, while the average MLS^® residential price is also down 2 per cent to $932,492.

Canadian employment took a slight downturn from the previous month, with the economy losing 18,000 jobs (-0.1 per cent) to 21.034 million in April. The employment rate fell by 0.1 points to 60.5 per cent, while the unemployment rate rose by 0.2 points to 6.9 per cent. Average hourly wages rose 4.5 per cent year-over-year to $37.77 in April.
           
Employment in B.C. decreased by 0.1 per cent to about 2.904 million, with the provincial economy losing 4,300 jobs in April. Employment in Metro Vancouver rose by 0.2 per cent to 1.677 million. The unemployment rate in B.C. rose 0.1 points to 6.8 per cent in April. Meanwhile, Vancouver's unemployment rate rose by 0.2 points to 7.0 per cent in April. 

The Canadian labour market gave back minimal gains found in March, contributing to a cumulative net loss of over 100,000 jobs thus far in 2026. Floundering employment and a weak economic outlook represent the downside risks facing the Bank of Canada, which must also address the inflationary pressure of the oil price shock stemming from the Iran conflict. While we tentatively expect another rate hold next month, this month’s inflation and growth data will determine the accuracy of the Bank’s updated first-quarter projection, which may illuminate its future policy direction.

Canadian employment took a slight downturn from the previous month, with the economy losing 18,000 jobs (-0.1 per cent) to 21.034 million in April. The employment rate fell by 0.1 points to 60.5 per cent, while the unemployment rate rose by 0.2 points to 6.9 per cent. Average hourly wages rose 4.5 per cent year-over-year to $37.77 in April.
           
Employment in B.C. decreased by 0.1 per cent to about 2.904 million, with the provincial economy losing 4,300 jobs in April. Employment in Metro Vancouver rose by 0.2 per cent to 1.677 million. The unemployment rate in B.C. rose 0.1 points to 6.8 per cent in April. Meanwhile, Vancouver's unemployment rate rose by 0.2 points to 7.0 per cent in April.  

The Canadian labour market gave back minimal gains found in March, contributing to a cumulative net loss of over 100,000 jobs thus far in 2026. Floundering employment and a weak economic outlook represent the downside risks facing the Bank of Canada, which must also address the inflationary pressure of the oil price shock stemming from the Iran conflict. While we tentatively expect another rate hold next month, this month’s inflation and growth data will determine the accuracy of the Bank’s updated first-quarter projection, which may illuminate its future policy direction.

To view the full interactive BCREA Housing Forecast, click here.
To view the BCREA Housing Forecast PDF, click here.

BC Housing Market Faces Multiple Headwinds in 2026

BCREA 2026 Second Quarter Housing Forecast

Vancouver, BC – April 27, 2026. The British Columbia Real Estate Association (BCREA) released its 2026 Second Quarter Housing Forecast today.

Multiple Listing Service^® (MLS^®) residential sales in BC are forecast to fall 2.1 per cent to 68,700 units this year. In 2027, MLS^® residential sales are forecast to move higher, rising 7.7 per cent to 74,000 units.

“The housing market continues to be challenged by persistent global headwinds and a struggling economy,” said BCREA Chief Economist Brendon Ogmundson. “However, improved affordability in many markets combined with several years of pent-up demand creates conditions for a rebound, though households will likely need a prolonged period of stability to re-enter the market.”

With active listings at their highest level since 2015, and additional pressure from elevated new-home inventory, we anticipate the average price in BC will fall by 1.4 per cent in 2026 to $939,800, down from $952,930 in 2025. This decrease largely reflects disproportionate weakness in more expensive markets in the Lower Mainland, casting downward pressure on the broader provincial average price.

Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.4 per cent on a year-over-year basis in March, following a 1.8 per cent increase in February. On a seasonally adjusted monthly basis, the CPI was up 0.5 per cent in March, equivalent to a 5.9 per cent increase on an annualized basis. The CPI ex-gasoline increased by 2.2 per cent in March, down from 2.4 per cent in the previous month. Additionally, food prices overall increased by 4 per cent year-over-year, down from 5.4 per cent in February. In BC, consumer prices rose 2.5 per cent year-over-year in March, up about 0.8 points from February. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, rose by 2.3 per cent and 2.2 per cent year-over-year, respectively. 
 
A sizeable uptick in headline inflation was largely driven by higher gasoline prices as a result of the oil price shock arising from the Middle Eastern conflict. However, 3-month annualized core inflation, while rising by roughly 0.5 points month-over-month, remains at about 1.65 per cent, below the Bank of Canada’s 2 per cent target. Unfortunately, the economy continues to face double-sided risks, as growth and employment have weakened while inflationary pressures loom. Looking ahead, we expect a fourth consecutive rate hold from the Bank next week, as they continue monitoring the scale and duration of rising oil prices amidst tumultuous negotiations from both sides. Ultimately, the Bank’s guidance during its April meeting should provide its perception of the oil shock, thus anchoring expectations for monetary policy through the next few months.

Canadian housing starts decreased 6 per cent from the previous month, totaling 235,852 units in March at a seasonally adjusted annual rate (SAAR).Starts were up 10 per cent from the same month last year (SAAR).  In areas with 10,000 or more residents, single-detached housing starts decreased by 9 per cent year-over-year, while multi-family and other starts increased by 14 per cent compared to March 2025. 

In areas of British Columbia with 10,000 or more residents, starts were down by about 6.3 per cent from last March to 30,430 units (SAAR). In these urban areas, single-detached starts increased by 7 per cent, while multi-family starts fell by 8 per cent year-over-year. In 2026, year-over-year starts are up by 39 per cent in Vancouver, 13 per cent in Victoria, and 3 per cent in Kelowna, but down by 90 per cent in Abbotsford, 22 per cent in Nanaimo.

There are a variety of reasons that you might consider selling a house with a mortgage. The most common scenarios are when you need to move to a new location for a new employment opportunity, your family situation has changed with the addition of children or when your children head off to college or university or move out altogether. In each case, if your home no longer meets your needs, you may be contemplating breaking your mortgage contract. If you are considering selling a house with a mortgage, ensure you understand all the costs associated with breaking the mortgage contract.

The Costs of Breaking the Mortgage Contract

The cost of selling your home before the mortgage term ends and breaking the mortgage contract will depend on your mortgage type. If you chose your mortgage type without really understanding the ins and outs of an open versus closed mortgage, it’s time to get up to date on what you bought into when you signed on the dotted line.

Open Mortgages

When it comes to selling a house with a mortgage, if you have an open mortgage, you can sell your home without paying penalties for breaking the mortgage contract. That’s because an open mortgage is designed to provide greater flexibility without incurring financial penalties. While open mortgages still have a term, borrowers don’t have to wait until the mortgage matures to make changes.

You can make additional mortgage payments on a month-to-month or year-to-year basis without limitations, change your mortgage payment frequency, refinance, pay off, or break your mortgage before the end of your open mortgage term, all without incurring any prepayment penalties whatsoever.

However, the tradeoff for all this flexibility is that open mortgages come with higher interest rates than closed mortgages. Lenders charge a premium for allowing borrowers to break or change their mortgage agreement without penalties.

Open mortgages are usually chosen by homeowners who anticipate being able to make larger prepayments or pay off their mortgage sooner or whose life circumstances may require them to sell their homes before the end of the mortgage term.

Closed Mortgages

If you chose a closed mortgage for the lower interest rate or because you had no intention of selling before your mortgage term expired, you may be facing substantial penalty fees associated with wanting to break the mortgage now.

A closed mortgage has set conditions for the duration of the mortgage term. Once the mortgage contract is signed, the terms and conditions can’t be altered without incurring prepayment penalties.

Closed mortgages are known for their lack of flexibility. Lenders may offer some prepayment privileges, such as the ability to pay a certain percentage of the principal each year without penalty, but if you want to prepay more, pay off the mortgage entirely, refinance, or change the mortgage before the end of the term, a prepayment penalty will be levied.

Lower interest rates are the tradeoff for this lack of flexibility. Lenders are willing to provide more favourable mortgage interest rates on a closed mortgage in order to deter borrowers from breaking the mortgage contract or making additional prepayments.

Closed mortgages are usually chosen by homeowners who expect to remain in their recently purchased home for at least the duration of the mortgage term. This option is also optimal if you don’t anticipate making prepayments above and beyond what’s allowed in the mortgage agreement.

As indicated, if you have a closed mortgage, there will be penalties for selling your home before the term is up.

The highest cost will be the prepayment penalty – the fee for breaking the mortgage contract. The prepayment penalty can be thousands of dollars and will vary based on the terms of your mortgage contract. There will also be administrative fees, appraisal fees, reinvestment fees and a mortgage discharge fee, which removes the charge on your current mortgage and registers a new one.

You may also have to repay any cash-back or home equity line of credit you received when you got your mortgage. These fees can make breaking a mortgage before the term ends VERY pricey.

Options for Breaking a Mortgage Contract

There are options if you are thinking about selling a house with a mortgage. Some mortgage lenders may allow you to extend the length of your mortgage while beginning a new mortgage in a Blend-and-Extend option. In this option, the interest rates for the old and new terms are blended, and you won’t have to pay the prepayment penalty. However, you still may need to pay administrative fees.

Unfortunately, not every mortgage lender offers this option, so the only other choice is to break the mortgage contract. In this case, you may get a lower interest rate on your new home, but you will have to pay a prepayment penalty for breaking the contract. If you have a choice in whether you sell your home before the mortgage term ends, ensure that the benefits of breaking the contract outweigh the costs of paying the prepayment penalty and any other associated fees.

Pros and Cons of Selling a House With a Mortgage

It can be tempting to break your mortgage or sell your home if you see a lower interest rate or a home that better meets your needs in the market. But in some cases, you may not have much of a choice in the matter, like if you have to move for work.

Here are some of the pros and cons of selling a house with a mortgage and breaking the contract:

Pro: You may be able to get a lower interest rate and pay off the mortgage faster if you keep the payments the same. When moving into a new house, it is possible that you could get a lower interest rate than on your previous mortgage, and if you budget your mortgage payments as if you are paying into your old mortgage, then you could pay off your new mortgage early.

Con: You could end up paying more in the long run because of fees and prepayment penalties. The fees for breaking a mortgage before the term ends are very high, and even if you make higher payments on your new mortgage, there is no guarantee that the interest saved will be enough to cover the penalties. However, your mortgage advisor can run the calculations for you.

Pro: You may be able to lock in at a lower interest rate for the new mortgage term. Selling your house allows you to look for a lower interest rate for your new home, saving you money in the long run.

Con: You may no longer qualify for a mortgage under current economic conditions. Times are tough, and it could be that you are selling your house not to buy a new one but to move into a rental. If this is the case, again, it’s vital to ensure that the benefits of selling your home early outweigh the costs of the penalties.

What Mortgage-Breaking Penalties May Look Like

Many homeowners who decide to post a for-sale sign on their front lawn might be surprised to learn that they face a sizeable mortgage-breaking penalty, mainly because of how interest rates have evolved since 2019. According to Canada Mortgage and Housing Corporation (CMHC), in June 2019, the average conventional fixed mortgage lending rate for a five-year term was 4.23 per cent. By June 2021, it had fallen to 3.26 per cent. In October 2024, it surged to 6.49 per cent, then dropped back to 3.99 per cent in November 2024.

In order to capitalize on higher interest rates, mortgage lenders can use various techniques to impose penalties on borrowers before their loans expire. Industry experts assert that the most common formula banks use is the difference between the lender’s present rate and the contractual rate, which is also referred to as an Interest Rate Differential (IRD).

If you have a closed mortgage with a variable rate, you will usually be forced to pay three months of interest. If you have a closed mortgage with a fixed rate, you will either pay three months’ worth of interest or the IRD amount, whichever is GREATER.

If you’re considering selling a house with a mortgage, you need to do the math:

Suppose you bought your property when interest rates were high, using a fixed-rate/closed mortgage option with a five-year term at 6.59 per cent. Let’s also suppose that you still have 24 months left in the term, and you still owe $300,000 but want to break the mortgage and sell now.

Three Months’ Interest Calculation:

Outstanding balance of your mortgage:
$300,000

Multiply the outstanding balance of your mortgage by the annual interest rate on your mortgage:
$300,000 x 6.59% = $19,770

Divide the answer by 12 months to get the monthly interest payable per year:
$19,770/12 = $1,647.50

Multiply the answer by 3 (months)
$1,647.50 x 3 = $4,942.50

Total Three Months’ Interest is $4,942.50

Interest Rate Differential Calculation:

Current mortgage interest rate:
6.59%

Current Interest Rate on a 3-Year Term:
4.74%

Rate difference between your mortgage rate and current interest rate:
1.85%

Multiply your mortgage balance by the rate differential to get the interest differential for 1 year:
$300,000 x 1.85% = $5,550

Divide this amount by 12 to get the amount for 1 month:
$5,550.00/12 = $462.50

Multiply this amount by the number of months left in your term:
$462.50 x 24 = $11,100

Total Interest Rate Differential Penalty is $11,100!

In this case of a closed/fixed rate contract, the estimated penalty for selling a house with a mortgage, is $11,100 – since it is the greater of the results for the Three Months’ Interest versus Interest Rate Differential calculations – a sizeable chunk of change!

To lighten your financial load, you can endeavour to trim your penalties by taking advantage of prepayment features. You can either pay a portion of the mortgage early without incurring penalties or max out your prepayment options, meaning you will lower the total balance without triggering added costs.

In the end, sellers should consider a couple of things before selling their home before mortgage expiration:

The first is requesting a payoff quote. Speak with your mortgage lender and obtain a payoff amount, which is the amount owed on the loan.

The second is calculating your home equity. How much equity do you have in your home? This could play an important role in your decision-making as if your property has substantially appreciated since you bought it and there’s a significant difference in the latest market value of your home and the remaining mortgage balance – even a large penalty like the one we calculated above could be justifiable.

When Do You Stop Paying a Mortgage When Selling a House?

If you pay off your mortgage BEFORE you sell your house, your mortgage payments stop when you pay off any applicable penalties, administration fees, appraisal fees, reinvestment fees and mortgage discharge fees.

If you break your mortgage while still owing, once you sell, part of the monies you receive will be used to pay off any relevant penalty fees, plus the remainder due on your mortgage, effectively ending the monthly payments on your old mortgage.

Additional Penalties for Selling a House Before 1 Year in Canada

While principal residences in Canada are not subject to capital gains when sold, investment properties do not share this benefit. So, if you’re considering selling a house with a mortgage – and it happens to be an investment property or a secondary home – if you sell it within a year of purchasing it, you’ll not only pay penalties for breaking the mortgage but you’ll also owe capital gains tax on 50 per cent of your profits.

Gather All the Information

Before selling a house with a mortgage, make sure you understand the costs associated with breaking your mortgage contract. It’s also a good idea to speak with a mortgage adviser, as they can provide you with valuable information needed to help navigate selling your home before the mortgage term ends.