Canada housing affordability and market trends
Quick facts
- Housing affordability in Canada improved in November 2025, 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 6.44% (down by 0.03% from October).
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 October’s CPI reading at 2.2%, and core measures showing broad easing. After seven consecutive rate cuts between June 2024 and March 2025—and two additional cuts in the fall—the Bank has now held its overnight rate at 2.25% in its December 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 stronger economic data. The Government of Canada’s five-year bond yield has risen back above 3%, prompting lenders to increase fixed mortgage rates by roughly 20 basis points heading into December. The lowest five-year fixed insured rate now sits around 3.89%, up from earlier in the fall.
Although borrowing costs are lower than they were a year ago, the housing market remains measured. Some regions are seeing modest gains in sales, but buyers are still navigating uncertainty tied to tariffs, shifting global trade policy, elevated inventory levels, and concerns about job stability.
What changed in Canada’s housing affordability in November?
Ratehub.ca’s November 2025 Affordability Report shows that buying conditions improved in 12 of Canada’s 13 major cities. The report tracks monthly affordability using average home prices, mortgage rates, and the mortgage stress test to determine the income required to purchase an average-priced home in each city.
In November, declining home prices remained the primary driver of improved affordability, but borrowing costs also played a small supporting role. Following the Bank of Canada’s 25-basis-point rate cut in late October, the average five-year fixed mortgage rate used in the study edged down to 4.44% from 4.47%, lowering the stress test rate to 6.44% and slightly reducing qualification thresholds.
Hamilton saw the largest month-over-month improvement. As sales slowed and inventory increased, market conditions moved closer to balance, easing price growth. The average home price fell by $12,500 to $734,700, cutting the income required to buy by $2,780. This translated into monthly mortgage payments that were $76 lower — or $912 less annually — compared to October. Affordability deteriorated in only one market. In Fredericton, a $2,700 increase in average home prices pushed the required income up by $330, raising monthly mortgage payments by $9, or $108 per year.
Looking ahead, the report suggests that affordability improvements may be limited in the months ahead. In its December 10 announcement, the Bank of Canada signaled that the policy rate — currently 2.25% — is likely to remain unchanged for the foreseeable future, keeping variable mortgage rates near current levels. Fixed mortgage rates have already moved higher alongside rising bond yields, with the lowest five-year fixed rate around 3.94%.
Also read: It became easier to buy a home in 12 of 13 Canadian cities in November
| City | Avg. home price (Nov) | Price change (Oct → Nov) | Monthly mortgage payment (Nov) | Payment change (Oct → Nov) | Income required (Nov) | Income change (Oct → Nov) |
| Vancouver | $1,123,700 | – $8,800 | $5,736 | – $63 | $228,610 | – $2,290 |
| Hamilton | $734,700 | – $12,500 | $3,750 | – $76 | $154,620 | – $2,780 |
| Edmonton | $408,600 | – $3,500 | $2,086 | – $24 | $92,600 | – $870 |
| Ottawa | $620,400 | – $2,300 | $3,167 | – $21 | $132,880 | – $760 |
| Victoria | $870,300 | – $3,300 | $4,443 | – $30 | $180,410 | – $1,090 |
| Toronto | $951,700 | – $5,100 | $4,858 | – $41 | $195,890 | – $1,470 |
| Calgary | $553,900 | –$11,300 | $2,828 | – $66 | $120,230 | – $2,470 |
| St. John’s | $394,300 | – $5,900 | $2,013 | – $36 | $89,880 | – $1,320 |
| Regina | $329,300 | – $5,800 | $1,681 | – $35 | $77,510 | – $1,290 |
| Winnipeg | $378,300 | – $2,500 | $1,931 | – $19 | $86,830 | – $670 |
| Montreal | $573,800 | – $7,700 | $2,929 | – $48 | $124,020 | – $1,760 |
| Halifax | $553,100 | –$10,200 | $2,823 | – $61 | $120,080 | – $2,230 |
| Fredericton | $351,200 | + $2,700 | $1,793 | + $9 | $81,680 | + $330 |
Mortgage stress test rate vs. income required by month
Canada housing market update for December 2025
Canada’s housing market entered the final stretch of the year with little momentum in either direction. National home sales slipped 0.6% in November, according to data from the Canadian Real Estate Association (CREA). While sales were still down roughly 11% compared to November 2024, the modest monthly change suggests the market is settling into a steady rhythm rather than moving into a slowdown.
Supply conditions continued to reinforce a balanced market backdrop. New listings declined 1.6% from October, helping to offset weaker sales and prevent inventory from building quickly. This kept the national sales-to-new-listings ratio largely unchanged, edging up to 52.7% from 52.2% the month prior. Ratios in the low-50% range are typically associated with balanced conditions, confirming that neither buyers nor sellers hold a clear advantage.
Inventory levels were similarly stable. National months of inventory held at 4.4 months in November, unchanged from the range seen between July and October and close to the historical norm of five months. This level remains well within balanced territory. Prices showed modest downward pressure as the year drew to a close. The MLS® Home Price Index slipped 0.4% month over month, while the non-seasonally adjusted index was down 3.7% compared to a year earlier. The national average sale price also fell 2% year over year to $682,219.
Heading into 2026, the November data suggest a housing market that is stable but cautious. Sales have cooled from earlier in the year, inventory remains balanced, and prices are easing modestly rather than rebounding sharply. For buyers, this environment continues to offer a relatively favourable mix of conditions.
Read more: Canadian home sales hold steady in November
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.