The Canadian housing market continued to show signs of weakness in August, with the Teranet-National Bank Composite House Price Index indicating that average home prices are now 4.2% below their November 2025 peak.
The decline is becoming more broad-based, with six of the 11 markets tracked by the index recording lower prices during the month. On a year-over-year basis, Vancouver led the declines at 6.5%, followed by Hamilton at 6.2% and Toronto at 6.1%.
Adding to the uncertainty is the recent rise in U.S. bond yields, which is putting upward pressure on Canadian bond yields. Since fixed mortgage rates are closely influenced by bond-market conditions, sustained higher yields could translate into increased borrowing costs for Canadian homeowners and prospective buyers.
The combination of softer home prices and potentially higher financing costs creates a challenging environment for the housing market. While lower prices may improve affordability from a purchase-price perspective, higher mortgage costs can offset some of that benefit.
Housing remains an important component of the Canadian economy, and developments in prices, interest rates and mortgage costs will be important factors to monitor in the months ahead.