Canadian home prices dropped 0.2% in August from July leading to an aggregate decline of 4.2% from the national price less than a year ago, according to the Teranet-National Bank Composite House Price Index report. The index collects data on resale home transactions in the 11 largest markets in Canada and the August reading extended a trend, said Daren King, an economist with the Economics & Strategy Group of National Bank of Canada. "This contraction marks the eighth decline in nine months, pushing prices down 4.2% from their most recent peak in November 2025 and to their lowest level since April 2023," said King. The August drop followed a brief increase in activity during the spring and summer, a modest resurgence that the report attributed to improving labour market conditions and some easing in affordability, reports Canadian Mortgage Professional (CMP). Six of the markets measured in the report experienced month-to-month declines in August, led by Vancouver (-1.6%), Halifax (-0.6%) Winnipeg (-0.3%), Hamilton (-0.3%) Ottawa-Gatineau (0.15%) and Edmonton (-0.1%). Five markets with month-to-month increases, included Victoria (+0.5%), Quebec City and Toronto (+0.4% each), Montreal (+0.3%) and Calgary (+0.2%). . Of 20 markets not included in the index, 10 recorded month-to-month price declines, with the largest declines concentrated in the Ontario and Atlantic markets of Saint John (-7.2%), St. CatheHrines (-3.3%) and Belleville (-2.7%). On the other side, Thunder Bay increased 3.9%, Lethbridge prices were up 3.2% and Abbotsford-Mission saw a 1.9% increase. Comparing prices year-over-year figures gives a deeper picture of deterioration, reports CMP. "The composite index fell 3.6% year-over-year between August 2025 and August 2026, steeper than the 3.2% annual decline recorded in July." Leading in year-over-year declines was Vancouver at -6.5%, Hamilton at -6.2% and Toronto at -6.1%. These three have dominated the composite index in declines for much of 2026. "That regional concentration aligns with CMHC's updated Canadian housing market forecast, which projected that British Columbia and Ontario would face the heaviest headwinds through the forecast period," says CMP. The country's strongest performing major market was Quebec City, with a year-over-year price gain of 9%, while Montreal saw a 4.1% increase and Winnipeg's price index rose 2.4%. Among the non-composite CMAs, 15 of 20 posted year-over-year declines, with St. Catharines (-8.9%), Barrie (-7.7%), and Guelph (-7.3%) among the hardest hit. Thunder Bay (+13%) and Trois-Rivières (+5.9%) were the notable exceptions. .Homeowners are facing increased financing costs due to a sharp increase in US bond yields which in turn has increased Canadian yields. When yields increase, mortgage rates usually follow and while the financial pressures have had some, but limited, effect on rates to date, King says higher financing costs are on the near horizon for households facing new mortgage arrangements. "This increase will therefore limit their borrowing capacity and weigh on price growth," said King, adding housing affordability "is expected to deteriorate over the coming quarters." Most markets experienced a decline in home sales in August Sales began declining again in the month, in tandem with a slowdown in employment growth, a combination that removed two of the key supports that had briefly stabilized prices over the summer, said the report "The convergence of falling sales activity, rising bond yields, and a national price level now sitting at a more than a three-year low suggests brokers may be operating in a window of compressed affordability gains that is narrowing faster than anticipated," it said.
