Home Prices: The Full Picture
Two markets, two different problems. American home prices have stopped rising in any real sense — frozen by 6.6% mortgages. Canadian home prices are actually falling, squeezed by a mortgage-renewal wave, rising arrears, and a shrinking population. Here's the honest state of both, and a realistic read on the months ahead.
Where prices stand — change from a year ago
United States US
The state of play
America's housing market is frozen, and the ice is starting to crack. On the surface the numbers look flat — national prices up about 1% from a year ago, the median at a record $429,300. But underneath: seasonally adjusted prices have now fallen three months in a row, ten of the twenty biggest metros are declining outright, and prices have lagged inflation for eleven consecutive months. In real terms, the average American home has been quietly losing value for almost a year.
The split is regional. The pandemic boomtowns are giving it back — Las Vegas, Seattle, Denver, Tampa and Phoenix are all negative year-over-year. The old-economy Northeast and Midwest — Chicago, New York, Boston — still lead, helped by return-to-office pull and chronically tight supply.
Why it's frozen: sellers locked into 3% pandemic mortgages won't list (why trade a 3% loan for a 6.6% one?), and buyers can't stretch to record prices at 6.6% rates with the savings rate at a four-year low. Tight supply prevents a crash; broken affordability prevents a recovery. The market's fate now sits with the Fed — and the Fed is jammed between 3.7% inflation and shrinking payrolls.
Canada CA
The state of play
Canada's market is deflating — but July brought the first genuine crack of light. The national benchmark is down 3.3% from a year ago, yet it rose 0.1% on the month — the first monthly gain since November 2024 — with sales up a fourth straight month and inventory at a 2026 low of 4.7 months. The pain is still concentrated where the bubble was: Toronto −4.6%, Vancouver −6.2% (still 13% below its 2022 peak). But the country is diverging sharply: Montreal is up 5.3% — Canada's strongest major market, now a seller's market at a 63% sales-to-listings ratio — while Calgary sits nearly flat (benchmark −2.0%, balanced conditions). This isn't one housing market anymore; it's a falling Ontario-BC market and a rising Quebec-Prairies market wearing the same flag.
Three forces are doing the damage. First, the renewal wave: 1.5 million households have already re-mortgaged at higher rates and about a million more come due within a year — GTA arrears have quadrupled from their lows. Second, population: Canada shrank by 55,000 people in Q1 2026, gutting the rental and condo-investor demand that underpinned the last decade. Third, the tariff economy is freezing job growth and buyer confidence in exactly the province — Ontario — with the most stretched prices.
The floor under the market: sellers are withdrawing rather than capitulating (Toronto listings down 17.8%), months of inventory nationally is just 4.8, the Bank of Canada holds 225bp of cutting room, and stress-tested borrowers have so far bent rather than broken. That's why this has been a grind, not a crash — roughly 1% shaved off every quarter, for three years.
Month by Month
| Market | Latest print | vs last month | vs last year | What it tells you |
|---|---|---|---|---|
| US National (Case-Shiller, SA) | May 2026 | −0.3% (3rd straight ↓) | +1.1% | The y/y number is yesterday's news — the monthly trend says prices peaked in early 2026 and are now slipping. |
| US Median (NAR) | $429,300 · May | seasonal record | +0.7% | Records in nominal dollars, losses in real dollars — the weakest annual gain since 2011. |
| Canada Benchmark (MLS HPI) | July 2026 | +0.1% — 1st gain since Nov '24 | −3.3% | Two months without decline, sales up 4 straight, inventory at 2026 lows — stabilization is now a pattern, not a blip. |
| Canada Average (CREA) | $674,819 · July | sales +0.5% | +0.2% | Composition effect, not appreciation — cheaper regions are carrying the volume. CREA forecasts +1.1% for 2026. |
| Montreal Average (QPAREB) | $693,686 · July | +0.5% | +5.3% | Canada's strongest major market — a seller's market (63% ratio) as listings fall faster than sales. |
| Calgary Benchmark (CREB) | $569,200 · July | −0.6% | −2.0% | Balanced at 3.5 months of supply; detached firm, condos soft — the in-between market. |
| Toronto Benchmark (TRREB) | $934,600 · July | still easing | −4.6% | Semis −7.3% show the mid-market cracking; condos hold up only because they already fell first. |
| Vancouver Benchmark (GVR) | $1,088,800 · July | −0.9% | −6.2% | 8 months of supply = buyer's market; sales down 9.8% y/y with no urgency anywhere. |
The Months Ahead
- Base case: drift, then negative headlines. With mortgages stuck above 6% and monthly prints already falling, the national y/y number likely crosses zero to slightly negative (0 to −2%) by winter — the first "US home prices are falling" headlines since 2012, more psychology than crash.
- The regional split widens. Sunbelt boomtowns (Vegas, Tampa, Phoenix, Denver) likely fall 3–6% y/y; the tight-supply Northeast/Midwest hold near flat.
- What changes the script: a Hormuz peace deal → oil and inflation fall → mortgage rates toward 6% → a spring 2027 thaw. Or the opposite: an oil-shock hike pushes mortgages past 7.5% and the freeze turns into forced declines.
- What we're watching: Case-Shiller (late Sep) for the y/y zero-cross; weekly mortgage rates; the Sep 15–16 Fed meeting.
- Base case: the grind continues. Toronto likely sheds another 3–5% through winter as the renewal wave rolls on; Vancouver drifts similarly. National HPI ends 2026 down ~3–5% y/y. No crash — listings are being withdrawn, not dumped.
- The pivot to watch is the Bank of Canada. One or two cuts (possible from Sep 16 onward, if tariff inflation stays contained) would lower renewal payment shocks through 2027 and likely put a floor under prices by spring 2027.
- Downside scenario (~1 in 3): the Aug 19 tariff wave spreads or the US rolls over → job losses meet renewal shocks → the first real forced selling, Toronto −10%+ from here, arrears blowing through CMHC's 0.34% projection.
- The condo caveat: with population now shrinking and investors underwater, condo and pre-construction demand has no engine — expect that segment to lag any recovery by a year or more.
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