Housing Affordability Just Posted a 10th Straight Quarterly Gain

The headline number

Housing affordability improved for a 10th consecutive quarter in the second quarter of 2026, the longest uninterrupted improving stretch National Bank of Canada has on record.

The mortgage payment on a representative home fell 1.1 percentage points to 51.1% of median household income, its lowest level in roughly four years, according to National Bank's Housing Affordability Monitor, reported by Canadian Mortgage Trends. Since the ratio peaked at 62.5% in the fourth quarter of 2023, it has fallen 11.4 percentage points.

That's real progress. It is not, on its own, evidence that housing has become affordable in any absolute sense — more on that below.

What's actually driving it has changed

Through 2024, lower financing costs did most of the work. That's no longer true. National Bank economist Kyle Dahms found the benchmark five-year mortgage cost actually rose seven basis points in the second quarter of 2026, and was nine basis points higher than a year earlier — a small headwind, not a tailwind.

What moved the number instead was a seasonally adjusted 2.1% decline in home prices, which alone reduced the payment-to-income ratio by 1.1 percentage points. Rising household incomes added another 0.4 points of improvement, enough to offset the 0.4-point drag from higher financing costs.

Zoom out to the full 11.4-point improvement since the 2023 peak, and National Bank attributes 5.1 points to lower financing costs over that longer window, 4.2 points to rising incomes, and 2.1 points to falling prices. In other words: the early gains came from financing costs falling, and the recent gains are coming from prices falling instead — a different mechanism, even though the overall trend line looks the same.

What this looks like in Ontario specifically

Ontario is doing more than its share of the national improvement. Toronto's payment-to-income ratio improved 2.5 percentage points in the quarter as its representative home price fell 3.6%, landing at 68.3% of median income. Hamilton improved to 57.5%, one of six metros that got more affordable this quarter alongside Vancouver, Calgary, Ottawa-Gatineau and Victoria.

That lines up with what CREA reported separately for July: Ontario was a buyer's market as recently as six months ago and is now, in the association's words, "already halfway back to normal levels." TD economist Rishi Sondhi told Canadian Mortgage Trends that over the past four months, national home sales gains have come almost exclusively from Ontario, where "improved affordability — amid healthy supply and low sales levels — is gradually drawing buyers off the sidelines." Prices fell year-over-year in Ontario and British Columbia in July even as the national average price ticked up 0.2%, according to CREA.

It didn't improve everywhere

Four of the ten metros went the other way this quarter: Quebec City, Winnipeg, Montreal and Edmonton all got less affordable as local prices continued climbing. Quebec City had the sharpest deterioration, with its ratio rising 1.4 percentage points as prices there grew 3.5% in the quarter and 12.5% over the year. That's the pattern worth noticing — this isn't a uniform national trend so much as prices cooling fastest in the markets that ran hottest, while smaller and mid-sized markets in other provinces keep climbing.

Vancouver remains the country's least affordable major market by a wide margin, with the mortgage payment on a representative home consuming 79.4% of median income, followed by Victoria at 73.9%. Toronto's 68.3% and Hamilton's 57.5% look considerably better by comparison, even though both are still well above their own historical norms.

Ten straight quarters of improvement still isn't "affordable"

Every metro area National Bank tracks remains less affordable than its own long-run average, including the Ontario markets that improved most this quarter. Nationally, the payment-to-income ratio still sits 10.4 percentage points above the average since 2000. Hamilton, Victoria and Quebec City carry the largest gaps against their own historical norms, each above 14 points.

If you're buying in Ontario right now

A market that's "more balanced" than it was six months ago changes the negotiating dynamic, but it doesn't change the arithmetic of what you can actually carry. The stress test, your income documentation and your down payment source still determine what you qualify for — a softer market widens your options, it doesn't relax the qualifying math.

If you're at the early stage of figuring out what you could actually afford, start with the Buying a Home overview, or go straight to the mortgage calculators to model a few scenarios against your own numbers rather than the national averages above.

What about Waterloo Region and the rest of southwestern Ontario?

National Bank's Housing Affordability Monitor tracks 10 major metros — Vancouver, Victoria, Calgary, Edmonton, Winnipeg, Toronto, Ottawa-Gatineau, Montreal, Quebec City and Hamilton — and Waterloo Region, London and the smaller centres across southwestern Ontario aren't broken out individually. What the CREA data tells us is that the softening and rebalancing described above is a province-wide pattern, not just a downtown Toronto story, but the pace and degree can differ meaningfully by local market.

If you're weighing a purchase in Kitchener-Waterloo, London, St. Thomas or anywhere in between, treat the national and Toronto-specific numbers as context, not as your local answer. A conversation about what's actually happening in your specific market, with your specific numbers, is worth more than any headline figure.