Canada housing affordability and market trends
Quick facts
- Housing affordability in Canada improved in January 2026, with the required income to purchase a home falling in 12 of 13 major markets, mainly due to lower home prices.
- The average mortgage stress test rate, based on the typical five-year fixed mortgage, came in at 6.40% (0.06% down from December).
WATCH: How much mortgage can you afford
Canada housing affordability
Jamie David, Sr. Director of Marketing and Mortgages
It’s no secret that buying a home in Canada has become increasingly difficult over the past decades. This has been fuelled further by a housing boom during the pandemic, when borrowing rates fell to a record low of 0.25%. Housing demand – and real estate prices – soared as a result, while the end of lockdown measures caused inflation to spike, peaking at a 40-year high of 8.1% in June 2022.
This prompted a rapid 10-part series of rate hikes from the Bank of Canada, which has a mandate to keep inflation below a 2% target. These took place between March 2022 and July 2023, raising the overall cost of borrowing for Canadians.
Today, the economic landscape looks dramatically different. Inflation has cooled significantly, with December’s CPI reading at 2.4%, and core measures showing broad easing. After nine cumulative rate cuts between June 2024 and October 2025, the Bank has held its overnight rate steady at 2.25% for a second time, in its January announcement. This places the policy rate at its lowest level since early 2022 and keeps the prime rate steady at 4.45%.
The Bank signalled that future moves will depend on how trade disruptions, tariff uncertainty, and global demand affect Canada’s economy in the months ahead.
Bond markets have already reacted to this economic data. The Government of Canada’s five-year bond yield is now in the range of 2.8%, limiting further declines in fixed-rate pricing. The lowest five-year fixed insured rate now sits around 3.84%, up from earlier in the fall.
Overall, Canada’s housing market remains cautious. Lower interest rates are helping improve affordability at the margin, but many buyers are still sitting on the sidelines due to economic uncertainty, job security concerns, and elevated housing supply in several major markets.
What changed in Canada’s housing affordability in January 2026?
Home affordability improved across nearly all major Canadian housing markets in January 2026, according to Ratehub.ca’s latest Home Affordability Report. Buyers benefited primarily from lower home prices. Although the average five-year fixed mortgage rate used in the report eased slightly to 4.40%, bringing the stress test rate down to 6.40%, the modest rate decline had a limited influence on qualification levels.
Vancouver saw the most significant improvement. A sharp slowdown in sales, combined with rising inventory, reduced price pressure, leading to a $12,900 drop in the average home price. That translated into a $3,600 reduction in the income required to qualify and a $100 monthly savings for buyers compared to December. Toronto and Ottawa also saw notable gains. In Toronto, the average home price declined by $7,100 month over month, reducing the income required to purchase the average home by $2,320. Ottawa saw a $7,000 decline in the average home price, lowering the required income threshold by $1,940.
Montreal stood out as the only market where affordability deteriorated. Home prices rose month over month by $6,600 to reach $579,900. That price growth pushed the income required to qualify for a mortgage up by $680.
| City | Avg price (Jan 2026) | Price change (Dec - Jan) | Monthly mortgage payment (Jan) | Payment Change (Dec - Jan) | Income Required (Jan) | Income Change (Dec - Jan) |
| Vancouver | $1,101,900 | ↓ $12,900 | $5,602 | ↓ $100 | $223,700 | ↓ $3,600 |
| Toronto | $935,200 | ↓ $7,100 | $4,755 | ↓ $65 | $192,110 | ↓ $2,320 |
| Ottawa | $606,700 | ↓ $7,000 | $3,085 | ↓ $54 | $129,880 | ↓ $1,940 |
| Victoria | $861,600 | ↓ $3,400 | $4,381 | ↓ $44 | $178,200 | ↓ $1,500 |
| Hamilton | $725,100 | ↓ $100 | $3,687 | ↓ $22 | $152,300 | ↓ $790 |
| Calgary | $555,500 | ↑ $700 | $2,824 | ↓ $14 | $120,150 | ↓ $450 |
| Regina | $330,600 | ↓ $300 | $1,681 | ↓ $12 | $77,540 | ↓ $400 |
| St. John’s | $395,500 | ↑ $400 | $2,011 | ↓ $10 | $89,830 | ↓ $330 |
| Edmonton | $409,000 | ↑ $700 | $2,079 | ↓ $9 | $92,400 | ↓ $290 |
| Fredericton | $351,800 | ↑ $600 | $1,789 | ↓ $7 | $81,550 | ↓ $250 |
| Halifax | $545,200 | ↑ $2,200 | $2,772 | ↓ $5 | $118,200 | ↓ $150 |
| Winnipeg | $382,100 | ↑ $1,700 | $1,943 | ↓ $3 | $87,300 | ↓ $60 |
| Montreal | $579,900 | ↑ $6,600 | $2,948 | ↑ $16 | $124,800 | ↑ $680 |
Mortgage stress test rate vs. income required by month
Canada housing market update for January 2026
Canada’s housing market entered 2026 with reduced activity, as national home sales fell 5.8% month over month in January, according to the Canadian Real Estate Association (CREA). On a non-seasonally adjusted basis, sales were 16.2% lower than a year earlier. The slowdown was heavily concentrated in Ontario’s Greater Golden Horseshoe and parts of Southwestern Ontario, where a severe winter storm disrupted showings and transactions. While sales slowed, new listings increased 7.3% from December. As a result, the national sales-to-new listings ratio (SNLR) fell to 45%, down from 51.3% at the end of 2025. Although this remains within balanced-market territory, it places conditions at the lower edge of that range, signalling a modest shift toward buyer-friendly. Inventory levels continued to recover gradually. The number of active listings reached 140,680 at the end of January, up 4.5% year over year but still below long-term seasonal norms. The months of inventory measure rose to 4.9 months, approaching the historical average of five months and remaining well within the balanced range. Home prices also edged lower amid softer demand. The National Composite MLS® Home Price Index (HPI) declined 0.9% month over month and was down 4.9% compared to January 2025. The national average sale price came in at $652,941, representing a 2.6% annual decrease. Overall, January’s data points to a housing market that is adjusting rather than accelerating. Conditions remain broadly balanced nationwide, but rising supply and cautious demand suggest a softer tone heading into early 2026.
National sales vs. fixed and variable mortgage rates
*National home data sales data for May is not yet available, as home sales data for a given month is not published until the following month. May's data will become available in mid-June upon publication of home sales figures by CREA.
What’s the difference between benchmark and average home prices?
When reporting on housing price trends, real estate boards use two different metrics: the average home price, and the benchmark home price. These two measures provide different insights into price trends, and how the market is evolving in both the short and long term.
- The average home price is calculated by adding the sale price of all the homes sold over a period of time, and then divided by the number of transactions. This provides the average price per unit. However, because the mix of the home sold can fluctuate significantly from month to month or by year, average home price trends can be more volatile, and do not always offer an accurate portrayal of the most common home sale in a given market.
- A benchmark home price is based on an index that’s been developed based on specific housing features, and how they change in terms of demand and value to home buyers over time. This provides a more accurate picture of the most typical type of home sold in a specific market, and that has changed over time. An example of a benchmark home price in the MLS Home Price Index created and used by the Canadian Real Estate Association (CREA). This is based on more than 15 years of CREA’s proprietary MLS System data, as well as statistical models to determine the “typical” home type and value per market.
Average home price by city by month
What is the sales-to-new‑listings ratio (SNLR)?
The “SNLR” stands for sales-to-new-listings ratio. It is a measure used by real estate boards to gauge the level of competition within a given housing market, and whether or not it's considered to be a “balanced” market, or more favourable to buyers or sellers. The SNLR is calculated by dividing the number of home sales by the number of newly-listed homes brought to market during a period of time. For example, if there were 500 home sales in a specific city during the month of March, and 750 homes brought to market, the SNLR would be:
(500/750)*100 = an SNLR of 66%
According to the Canadian Real Estate Association:
- A ratio of 45 - 65% is considered a balanced market. This means there is a sufficient supply of homes available for sale to meet home buyer demand. These conditions help keep home price growth stable, and buyers are less likely to encounter excessive multi-offer situations that can drive prices higher.
- A ratio below 45% is considered to be a buyers’ market. This means there is an oversupply of available homes for sale and not enough buyer demand. Home prices tend to decrease in buyers’ markets as homes often sell for less than they’re listed, and multi-offer situations are less common.
- A ratio above 65% is considered to be a sellers’ market. This defines a market where there are too few homes available for sale to satisfy buyer demand, and competition to purchase listings is fierce. Home prices are driven higher in sellers’ markets as buyers must often engage in bidding wars on the same property.
How the stress test impacts mortgage qualification
The mortgage stress test is a mortgage qualification requirement that ensures borrowers could still afford to make their payments in the case that interest rates should rise. Mortgage applicants must prove they could still afford their mortgage under the higher of the following two scenarios:
- The mortgage rate they receive from their lender, plus 2%.
- The Minimum Qualifying Rate (MQR), which is currently 5.25%. However, given there are no contract mortgage rates currently available at 3.25% or lower, this threshold is obsolete, and will remain so unless Canadian mortgage rates considerably decrease.
For example, let’s say you get a mortgage rate of 5% from your mortgage lender. You would actually need to have the sufficient borrowing criteria – such as income, debt ratios, and down payment size, etc. – to qualify for a mortgage at 7%.
The mortgage stress test also reduces the size of mortgage borrowers will qualify for. This is because when you have a higher mortgage rate, it results in a higher monthly payment to cover the additional cost of borrowing.
For example, let’s say a borrower has a household income of $100,000, and buys a home priced at $454,161, with a down payment of $50,000. However, because the borrower must qualify at a rate of 7.64%, the purchase price they’d actually qualify for would be just $387,670 – a difference of $66,691.