After stabilizing in December, the Teranet-National Bank composite index fell for the first time in six months, with prices declining 0.4% from December to January. This contraction comes at a time when the number of transactions in the resale market declined for the third consecutive month in January (top chart), despite the Bank of Canada’s key interest rate cuts in the fall and the improvement in the labour market in recent months. On an annual basis, the composite index fell 4.0% compared to January 2025, a larger contraction than the 3.5% recorded the previous month. However, the decline in prices was not observed across the country. In fact, improved affordability, due to more favourable fixed and variable interest rates and resilient household incomes, supported price growth in some regions. This was particularly the case in Quebec and the Prairies, which are more affordable than the national average and experienced the highest annual price growth. Conversely, persistent affordability challenges in Ontario and British Columbia continue to weigh on prices in an increasingly unfavourable demographic context (bottom chart). Although a moderate recovery in resale market activity is anticipated in 2026, continued market weakness in Ontario and British Columbia is expected to limit short-term price increases at the national level. Recent cuts in the Bank of Canada’s policy rates have provided some relief, but 5-year mortgage rates could start to rise again in 2026 if our scenario of economic improvement materializes. Combined with population growth that is expected to moderate further, these factors could continue to weigh on the outlook for the residential market.

Month-Over-Month

The Teranet-National Bank Composite House Price Index™, which covers the country’s eleven largest CMAs, fell 0.4% from December to January, marking the first decline in six months (after seasonal adjustment). In January, seven of the 11 CMAs included in the index recorded declines: Ottawa-Gatineau (-2.4% after +3.2% the previous month), Winnipeg (-1.0%), Toronto (-0.9%), Edmonton (-0.9%), Vancouver (-0.7%), Hamilton (-0.5%) and Victoria (-0.1%). Conversely, prices rose in Halifax (+2.0%), Quebec City (+1.6%), Montreal (+1.4%) and Calgary (+0.7%). In addition, declines were observed in ten of the 18 CMAs not included in the composite index for which data are available in January. The largest monthly decreases were recorded in Peterborough (-7.9% after +6.3% the previous month), Sudbury (-2.7% after +3.8% the previous month) and Belleville (-2.7%). Conversely, the largest increases were observed in Trois-Rivières (+3.7% after -2.9% the previous month), Kingston (+3.0% after -2.5% the previous month) and Guelph (+1.9%).

Before seasonal adjustments, the Teranet-National Bank Composite House Price Index™ declined 1.0% from December to January, marking the ninth decline in ten months.

Year-Over-Year

The Teranet-National Bank Composite Home Price Index™ fell by 4.0% between January 2025 and January 2026, a steeper decline than the 3.5% drop seen in the previous month. However, increases were recorded in seven of the 11 cities that make up the composite index in January. Quebec City led the way with an 11.8% increase in prices over 12 months, followed by Montreal (+5.7%) and Winnipeg (+4.6%). Conversely, the sharpest declines were observed in Toronto (-8.6%), Hamilton (-6.7%), and Vancouver (-6.4%). Of the 18 other CMAs not included in the composite index, 12 posted annual declines. Among the declining markets, the sharpest declines were recorded in Peterborough (-7.5%), Abbotsford-Mission (-7.4%), and Kitchener (-6.9%). Conversely, the largest increases were observed in Sherbrooke (+13.3%), Thunder Bay (+10.6%), and Lethbridge (+9.2%).

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Teranet-National Bank House Price Index Begins The Year Down by Daren King | Economist | National Bank of Canada

The Teranet-National Bank Housing Prices Down in January