In February 2026, National Bank of Canada released its latest Housing Affordability Monitor, showing that Canadian housing affordability improved for the eighth consecutive quarter in Q4 2025. According to the report, this marks the longest stretch of affordability improvement ever recorded in the country. The mortgage payment on a representative home as a percentage of income fell to 51.6%, its lowest level in almost four years.&nbsp;On paper, this is encouraging. It suggests that the extreme pressure seen during the peak of the affordability crisis has begun to ease. However, this is a technical improvement in housing affordability, not a broad-based affordability breakthrough for Canadian households.National Bank attributed the latest improvement to several factors. In Q4 2025, seasonally adjusted home prices rose only 0.4%, the benchmark five-year mortgage rate moved only slightly, and median household income increased by 0.8%. In the bank’s affordability model, that modest income gain contributed more to the quarterly improvement than interest-rate changes did.&nbsp;That point deserves some context. A 0.8% increase in median household income may improve an affordability formula, but it does not necessarily mean households feel financially stronger. For many Canadians, any income growth has been offset by higher costs for essentials, including food, rent, insurance, utilities and transportation. In other words, affordability may be improving in the housing data before it is meaningfully felt in household budgets.The pressure from everyday costs remains significant. Statistics Canada reported that grocery prices rose 3.5% on an annual average basis in 2025, faster than the 2.2% increase recorded in 2024. Some categories rose much faster: coffee increased 20.3%, fresh or frozen beef rose 13.5%, and oranges were up 10.4% in 2025. The Bank of Canada has also noted that grocery prices have risen by about 22% since 2022, compared with an average increase of about 13% for other consumer prices.&nbsp;The labour market adds another layer of caution. While wages have risen for some workers, unemployment remains elevated by recent historical standards. Statistics Canada reported that Canada’s unemployment rate was 6.7% in March 2026, while Ontario’s rate stood at 7.6%. In the Toronto census metropolitan area, unemployment was 8.1% on a three-month moving average. This helps explain why many households may not experience the current affordability improvement as relief. Wage growth for employed workers can coexist with slower hiring, job insecurity and layoffs in specific sectors.National Bank’s report focused on two major barriers facing potential homebuyers: the down payment and the monthly mortgage payment. The down-payment measure estimates how many months a median-income household would need to save for the minimum cash down payment on a representative home, assuming it saves 10% of pre-tax income. The monthly mortgage-payment measure calculates the payment on a median-priced home using a 25-year amortization and a five-year term, then expresses that payment as a share of median household income.By this measure, affordability improved in six of the ten major markets tracked by National Bank. The strongest quarterly improvements were recorded in Vancouver, Calgary and Toronto. Edmonton, Victoria and Hamilton also improved. By contrast, affordability deteriorated in Quebec City and Ottawa-Gatineau, while Montreal and Winnipeg were unchanged.&nbsp;Toronto remains one of the clearest examples of the mixed picture. National Bank reported that the qualifying annual income required to purchase a Toronto condo was $148,923, while the qualifying income required for a non-condo property was $253,390. A median-income household would need approximately 48 months to save the minimum down payment for a condo and 105 months for a non-condo, assuming a 10% savings rate. The mortgage payment as a share of income was 41.4% for condos and 71.7% for non-condo properties. Both figures improved slightly from the previous quarter, but they remain high in practical terms.&nbsp;Vancouver showed an even more dramatic divide. The qualifying annual income required to purchase a Vancouver condo was $163,277, while the figure for a non-condo property was $319,603. A median-income household would need approximately 61 months to save the minimum down payment for a condo and 428 months for a non-condo. The mortgage payment represented 49.9% of income for condos and 114.0% for non-condo properties.&nbsp;These numbers show why the word “improvement” needs careful handling. Affordability is improving from very strained levels, particularly in markets that had become the most expensive. But a slight improvement does not mean homes have become affordable for the average buyer. In Toronto and Vancouver especially, the income required to purchase a home remains far above the median household income.The report also shows that affordability conditions are not improving evenly across Canada. Quebec City saw affordability worsen, with the mortgage payment as a percentage of income rising to 34.5% for non-condo properties and 24.3% for condos. Montreal was essentially unchanged, with the mortgage-payment burden holding at 47.1% for non-condo properties and easing only slightly to 33.1% for condos.&nbsp;The broader takeaway is that Canada’s housing market is moving in a better direction, but the recovery is fragile. Softer home prices in some expensive markets, modest income growth and more stable borrowing costs have helped improve the affordability calculation. Yet households are still dealing with elevated grocery prices, high shelter costs, a cautious labour market and the long-standing challenge of saving a down payment.For buyers, this means the market may be somewhat less strained than it was at the peak, but affordability remains far from comfortable. The latest data offers a sign of progress. Housing affordability is improving statistically, but for many Canadians, the lived experience remains difficult. Until income growth meaningfully outpaces essential costs, and until home prices become better aligned with local earnings, the affordability recovery will remain uneven, fragile and incomplete.

National Bank Reports Housing Affordability Improvement, But Recovery Remains Uneven

National Bank’s latest Housing Affordability Monitor shows affordability improving in Canada, though buyers still face high costs and uneven markets.

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