Canadian Housing Market Rebalances in July 2026

Canada’s housing market continued to improve in July, with sales rising, new listings falling, and home prices posting their first monthly increase in nearly two years.

The bigger story, however, is balance. Many Canadian markets are moving away from buyer- or seller-dominated conditions and toward a more normal environment.

Key Takeaways

• Home sales increased 0.5% month-over-month, the fourth consecutive monthly gain.
• New listings fell 1.6%, the third straight monthly decline.
• The sales-to-new-listings ratio reached 51.3%, within balanced-market territory.
• Canada had 4.7 months of inventory, slightly below its long-term average.
• The MLS® Home Price Index increased 0.1%, its first monthly gain since November 2024.
• Prices were still 3.3% lower than July 2025.

What Does a More Balanced Market Mean?

CREA generally considers a sales-to-new-listings ratio between 45% and 65% consistent with a balanced housing market.

July’s 51.3% reading suggests neither buyers nor sellers have a significant advantage nationally.

For buyers, that can mean more time to make decisions, fewer rushed offers and greater confidence that prices are stabilizing.

For sellers, improving sales combined with fewer new listings could gradually create stronger demand if the trend continues.

Are Canadian Home Prices Starting to Recover?

Possibly, but it’s too early to call it a rebound.

The national MLS® Home Price Index increased just 0.1% in July. While small, it was the first monthly increase since November 2024.

Prices remained 3.3% below July 2025 levels, so stabilization is a better description than a new housing boom.

Mortgage Rates Remain the Wild Card

Housing affordability isn’t determined by home prices alone. Mortgage rates can significantly change the monthly cost of buying a home.

The Bank of Canada’s next rate announcement is scheduled for September 2, 2026.

But borrowers should remember that fixed mortgage rates can change even when the Bank of Canada does nothing. Fixed rates are heavily influenced by bond yields, while variable rates are more directly connected to the Bank of Canada’s policy rate.

Global bond yields have been under upward pressure, which could limit how much relief Canadian fixed mortgage borrowers see.

What Should Buyers Do?

A more balanced market can be good news, but it doesn’t mean buyers should rush.

Instead, use this period to:

• get a mortgage pre-approval;
• establish a comfortable monthly payment;
• compare fixed and variable mortgage options;
• understand conditions in your local market; and
• budget for closing costs and ongoing homeownership expenses.

National statistics tell us where the market is heading. Your personal finances should determine when you’re ready to buy.

Bottom Line

Canada’s housing market appears to be moving toward more normal conditions.

Sales are slowly improving, inventory is tightening and prices are showing early signs of stabilization.

For buyers, that could mean a healthier market with less pressure. But with mortgage rates still influenced by uncertain global bond markets, affordability — not market timing — should remain the priority.

Is Canada in a buyer’s or seller’s market?

Nationally, Canada was broadly balanced in July, with a sales-to-new-listings ratio of 51.3%. Local markets can be very different.

Are Canadian home prices rising again?

The national MLS® Home Price Index increased 0.1% in July, its first monthly gain since November 2024. However, prices remained 3.3% below July 2025.

Will mortgage rates fall if the Bank of Canada cuts rates?

Not necessarily. Variable mortgage rates are closely tied to Bank of Canada policy, while fixed rates are influenced primarily by bond yields.

Is now a good time to buy a home?

That depends more on your budget, income stability, mortgage options and local housing market than on national headlines. A balanced market can give prepared buyers more room to make careful decisions.

Cedric Pelletier
Mortgage Associate
Maximal Mortgages 2026

Canada’s inflation rate moved higher in July, but the headline number doesn’t tell the whole story.

The Consumer Price Index (CPI) rose 3.0% year over year in July, up from 2.8% in June. While that might sound like inflation is heating up again, much of the increase came from gasoline and travel costs.

For Canadian homeowners, homebuyers and anyone approaching a mortgage renewal, the more important question is whether inflation is becoming widespread—or if this is a temporary bump.

Key Takeaways

• Headline inflation increased to 3.0% in July.
• Gasoline prices jumped 25.7% year over year, helping push CPI higher.
• CPI excluding gasoline remained much lower at 2.2%.
• The average of the Bank of Canada’s preferred core inflation measures was about 1.95%.
• Grocery inflation slowed to 3.1%, although food costs continue to pressure household budgets.
• The report does not necessarily signal an immediate Bank of Canada rate increase.

Why Did Inflation Rise?

According to Statistics Canada, gasoline was one of the biggest drivers of July’s higher inflation reading.

Gas prices increased 25.7% c

ompared with a year earlier, partly due to geopolitical tensions and disruptions affecting global energy and shipping routes.

Travel also became more expensive. Travel tour prices increased 15.2% year over year, while air transportation prices rose 12.0%.

But when gasoline is removed from the calculation, inflation was just 2.2%—the same rate for three consecutive months.

That distinction matters for interest rates.

Core Inflation Is the Number to Watch

The Bank of Canada doesn’t make interest-rate decisions based on headline CPI alone. It also looks closely at measures of core inflation, which help identify whether price increases are becoming persistent across the economy.

The average of the Bank’s preferred core measures came in around 1.95%, essentially in line with its 2% inflation target.

In simple terms:

Headline CPI: 3.0%

CPI excluding gasoline: 2.2%
Preferred core measures: about 1.95%

This suggests July’s higher inflation rate was driven more by specific categories than a broad resurgence in inflation.

What Does This Mean for the Bank of Canada?

For now, the numbers support a patient approach.

Higher gasoline prices reduce household purchasing power, but an energy-driven increase in inflation does not automatically require higher interest rates.

The Bank of Canada will be watching to see whether higher energy costs begin spreading into other areas of the economy.

If core inflation remains c

ontained and domestic demand continues to slow, the case for keeping the policy rate unchanged becomes stronger.

Based on the current data, a Bank of Canada hold through the remainder of 2026 remains a reasonable base-case scenario, although future inflation and economic reports could change that outlook.

What Does This Mean for Mortgage Rates?

The answer depends on the type of mortgage.

Variable Mortgage Rates

Variable mortgage rates are closely tied to the Bank of Canada’s policy rate.

If the Bank remains on hold, there would be no Bank of Canada-driven reason for variable mortgage rates to increase.

That could provide some stability for borrowers with variable-rate mortgages or those considering one.

Fixed Mortgage Rates

Fixed mortgage rates work differently.

They are influenced heavily by Government of Canada bond yields, which can move based on expectations for future inflation, economic growth and Bank of Canada policy.

This means fixed mortgage rates can rise or fall even when the Bank of Canada does nothing.

If markets view July’s inflation increase as temporary, upward pressure on fixed rates may be limited. If investors become concerned that inflation is becoming persistent, b

ond yields—and potentially fixed mortgage rates—could rise.

Grocery Inflation Is Slowing, But Canadians Still Feel It

There was some good news for household budgets.

Grocery prices increased 3.1% year over year in July, down from 3.9% in June.

However, grocery inflation has now exceeded overall CPI inflation for 18 consecutive months.

This helps explain why many Canadians may not feel much relief even when inflation indicators improve.

Remember: lower inflation does not mean prices are falling. It means prices are increasing more slowly.

For homeowners already dealing with mortgage payments, property taxes, utilities and insurance, those higher everyday costs still matter.

What Should Homeowners and Buyers Do?

Trying to perfectly predict the next mortgage-rate move is difficult.

Instead, focus on what you can co

ntrol.

If you’re buying a home, build your budget around a comfortable monthly payment—not the maximum mortgage you can qualify for.

If your mortgage is renewing, don’t automatically accept your lender’s first offer. Compare fixed and variable options, rates, penalties and prepayment privileges.

And if you’re deciding between fixed and variable, consider your risk tolerance, income stability and future plans, not simply which rate is lowest today.

Bottom Line

Canada’s 3.0% inflation reading looks more concerning at first glance than it does when you dig into the details.

Gasoline and travel costs were major contributors, while CPI excluding gasoline remained at 2.2% and underlying core inflation stayed around the Bank of Canada’s 2% target.

For mortgage borrowers, the key takeaway is simple:

Don’t make a major mortgage decision based on one inflation headline.

Watch the trend in core inflation, Bank of Canada policy and bond yields. Those indicators can provide a much clearer picture of where Canadian mortgage rates may be heading.

This article is for general educational purposes and should not be considered personalized financial or mortgage advice.

FAQ

Does 3.0% inflation mean mortgage rates will rise?

Not necessarily. The Bank of Canada looks at underlying inflation and broader economic conditions. Fixed mortgage rates also depend heavily on bond yields.

What is core inflation?

Core inflation measures attempt to identify persistent price pressures by reducing the impact of unusually volatile price movements. It can give policymakers a clearer view of the underlying inflation trend.

Should I choose a fixed or variable mortgage?

There is no single answer for every borrower. Fixed rates provide greater certainty, while variable rates provide more exposure to future Bank of Canada rate changes. Your budget and tolerance for changing payments should guide the decision.

Should I wait for mortgage rates to fall before buying?

Not necessarily. Rates are only one part of affordability. Home prices, inventory, income and your personal finances can also change while you wait.

Cedric Pelletier
Mortgage Associate
Maximal Mortgages 2026

Can You Still Be a First-Time Home Buyer in Canada?

Many Canadians assume that once you’ve owned a home, you’ve permanently lost access to first-time home buyer programs.

That’s not always true.

The key is that Canada doesn’t have one universal definition of a first-time home buyer. Federal programs, mortgage insurance rules, and provincial incentives all have different eligibility requirements.

Key Takeaways

• Previous home ownership doesn’t always disqualify you.
• Many federal programs use a four-year occupancy rule, not a lifetime ownership test.
• Provincial rebates often have completely different rules.
• Your eligibility depends on which program you’re applying for.

Why the Rules Are Different

Some programs ask:

• Have you ever owned a home?
• Did you live in the home you owned?
• Was it your principal residence?
• Did you inherit an ownership interest?
• Have you recently separated from a spouse or common-law partner?

Because each program asks different questions, you could qualify for one benefit but not another.

Federal Programs May Give You a Second Chance

Programs like the First Home Savings Account (FHSA), Home Buyers’ Plan (HBP), and Home Buyers’ Amount generally look at whether you’ve lived in a home you owned during the current year and previous four calendar years.

If you sold your home years ago and have been renting since, you may qualify again.

Provincial Rules Can Be Stricter

This is where many buyers get caught off guard.

For example, Ontario’s Land Transfer Tax Refund generally uses a lifetime ownership test, meaning previous ownership can permanently eliminate eligibility.

Meanwhile, provinces like Alberta don’t charge a traditional land transfer tax, so different rules apply.

Why This Matters

You might qualify for:

• An FHSA
• The Home Buyers’ Plan
• The Home Buyers’ Amount
• A 30-year insured mortgage (if eligible)

…while not qualifying for a provincial tax rebate.

The same buyer can receive different answers depending on the program.

The Bottom Line

Don’t assume you’ve lost every first-time home buyer benefit simply because you’ve owned a home before.

Every program has its own definition, and the differences could be worth thousands of dollars.

Before making a decision, speak with a mortgage professional who can review your specific situation and identify which programs you may still qualify for.

Frequently Asked Questions

Can I be a first-time home buyer if I owned a home years ago?
Yes. Many federal programs allow you to qualify again if you haven’t lived in a home you owned during the previous four years.

Does owning a rental property disqualify me?
Not always. Some programs focus on occupancy, while others look at ownership history.

Do all provinces use the same rules?
No. Provincial incentives have their own eligibility requirements, which may differ significantly from federal programs.

Cedric Pelletier
Mortgage Associate
780-220-7617

Je parle Francais 🙂