Canada’s housing slowdown is now being compounded by a growing wave of failed real estate transactions, as buyers and sellers struggle with financing gaps, falling property values, and rising economic uncertainty.
A new survey of more than 1,000 real estate agents across Canada found that collapsed housing deals are becoming increasingly common in 2026, highlighting mounting stress in the country’s real estate market after years of rapid price growth during the pandemic boom.
Joel Fox, chief operating officer of Ownright Law, said the increase in failed transactions is becoming noticeable across the industry.
“Failed transactions are definitely rising,” Fox said, adding that the trend is also visible within his company’s day-to-day operations.
According to the survey, financing problems were identified as the leading cause of failed transactions, with 34% of agents saying financing issues were the primary reason deals collapsed this year. Meanwhile, 38% said financing-related failures have become more common compared with two years ago.
Agents also pointed to buyer hesitation and growing uncertainty as major factors slowing transactions. Buyers are increasingly adding multiple conditions to offers, creating more opportunities to back out of agreements before closing.
Some buyers are also running into cash flow problems on closing day, especially when their purchase depends on selling another property first. If the original property sale falls through — or the value drops before closing — buyers can suddenly face financing shortfalls.
Sellers are also facing pressure in Canada’s softer housing market. In some cases, homeowners can no longer sell properties at prices high enough to cover outstanding mortgage debt and other loans attached to their homes.
Fox said the problem has become more widespread as home prices decline while many owners remain burdened by high-interest mortgages.
The survey, conducted between March 27 and April 29 outside Quebec, also found that broader economic fears are affecting buyer confidence. Nearly 70% of agents said clients have become significantly more cautious about taking financial risks compared with the pre-2022 market.
About 40% of respondents cited recession concerns and economic uncertainty as the biggest reason buyers are hesitating. Employment instability and elevated interest rates were also listed among the key worries impacting purchasing decisions.
Political and economic uncertainty in the United States is also spilling into the Canadian housing market. Nearly one-quarter of agents said instability south of the border frequently disrupts transactions, while another 69% said it occasionally affects buyer behavior.
Fox said housing decisions are no longer driven solely by interest rates and property prices.
“In the past, people mainly watched mortgage rates and average home prices to predict where the market was heading,” he said. “Now broader economic and geopolitical uncertainty is playing a much larger role.”
Data from the Canadian Real Estate Association shows average home prices in Canada have fallen nearly 19% since the market peak in February 2022, during the pandemic-era housing frenzy. National home sales have also dropped roughly 40% from their March 2022 highs.
Despite hopes for recovery earlier this year, Fox said he does not expect a major rebound in the near future.
Real estate agents remain divided on where the market is headed next. The survey found that 43% of agents remain confident the housing market will recover within the next 12 months, while 25% are pessimistic and 28% remain neutral.
