A fresh batch of economic data this week paints a mixed picture of Canada’s housing market and broader economy, with home prices ticking up but remaining weak in inflation-adjusted terms, rents still elevated for reasons researchers can’t fully explain, and mortgage arrears climbing to their highest level in more than a decade.
Home Prices Rise, But Affordability Still Lags
Data from the Bank for International Settlements shows Canadian home prices rose 0.78% in the second quarter of 2026, the first increase in a year. Despite the uptick, prices remain 19.5% below their peak. Once adjusted for inflation, prices actually fell again, and are now down nearly 30% from the peak. In real terms, home prices have returned to levels last seen in 2016, though affordability has not improved to match.
Rent Surge Remains Partly Unexplained
A new Bank of Canada study found that asking rents surged more than 20% between the fourth quarter of 2021 and the fourth quarter of 2026. The study’s author said population growth and financing conditions explain most of the increase over that period. However, researchers could not explain a year-over-year jump in rents in early 2020, before the pandemic began, with the bulk of that growth labeled “unexplained” in the report. The findings raise questions about whether a speculative rental bubble predated, rather than followed, the period of aggressive population growth.
Enrollment and GDP Trends
Statistics Canada figures show total postsecondary enrollment grew 0.14%, or about 3,200 students, to a record 2.35 million in the 2024/25 school year. International student enrollment fell 6.9%, a drop of roughly 39,600 students, following recent policy changes affecting foreign students. Domestic enrollment growth, however, hit a 14-year high, offsetting the international decline.
Separately, Statistics Canada reported that GDP was flat in July, though revisions added 0.1% to previously reported growth for 2026. The agency said the revision falls within its normal tolerance range, but it is notable given how slow recent growth has been, representing roughly one in ten dollars of GDP growth recorded so far this year.
Mortgage Arrears Climb as Bank Portfolios Shrink
Canadian banks continue to see more borrowers fall behind on mortgage payments. Mortgages in arrears reached 0.29% in July, up six basis points from a year earlier and the highest level since May 2014. At the same time, the total number of mortgages held by banks fell to 4.91 million in July, a six-year low. The data suggests that even as the overall number of mortgage accounts shrinks, a growing share of remaining borrowers are struggling to keep up with payments.
Key Canadian Economic Indicators
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