At a Glance

• Buyer interest stayed near record levels with 22,959 showings in July, up 2.6 percent from June and 22.4 percent year-over-year
• Sales slipped to 581 homes, down 12.4 percent from June and 10.2 percent below last July
• Median sale price eased to $675,000, down 1.7 percent from June and 2.9 percent year-over-year
• Homes sold at 99.5 percent of list price on average - the first month below list since February - with condos at 94.7 percent
• Supply tightened to 3.9 months from 4.1, keeping the market balanced but leaning slightly firmer
• Bank of Canada held its policy rate at 2.25 percent on July 15, its sixth consecutive hold; the best 5-year fixed rates now sit just above 4 percent
• Local unemployment improved to 8.5 percent in June from 8.7 percent in May, but remains well above the national 6.5 percent
• CREA now expects national sales to decline 1.4 percent in 2026, pushing the anticipated recovery into 2027

Showings

Buyer showings totaled 22,959 in July, up 2.6 percent from June and a striking 22.4 percent above July 2025. That makes July the second-busiest showing month on record, behind only May's 24,162. Buyers are clearly still engaged, but they are taking their time. Showings per completed sale climbed to roughly 40 in July, up from about 34 in June and 29 a year ago. People are looking more and committing less, which is the signature of a market where buyers feel no urgency.

Prices

Median Sale Price

The median sale price eased to $675,000, down 1.7 percent from June's $687,000 and 2.9 percent below July 2025's $695,000. After holding essentially flat through the late spring, the median drifted lower as buyers negotiated harder through the summer lull.

Average Sale Price

Average sale price came in at $706,622, declining 3.1 percent from June and 3.8 percent year-over-year. On a per-square-foot basis, the average price was $393, down 4.8 percent from $413 a year ago. That is a useful reminder that the region's affordability picture has quietly improved for buyers even where headline prices look sticky.

Prices by Property Type

Single-family homes led at $762,050 (median), followed by townhouses at $595,500, semi-detached homes at $574,900, and condos at $329,950. Single-family homes and townhouses held up best, each down about 3.2 percent year-over-year. Semi-detached homes fell 10.9 percent, and condos posted the steepest decline at 13.5 percent, though with only 64 condo sales in the month, single-month readings in that segment should be taken with a grain of salt.

Sales

Five hundred eighty-one homes sold in July, down 12.4 percent from June and snapping two consecutive monthly gains. Single-family homes accounted for 384 sales, followed by townhouses at 104, condos at 64, and semi-detached homes at 29. Activity was 10.2 percent below last July's pace. Some of this is the normal summer slowdown, but the widening gap between heavy showing traffic and softer closings suggests buyers are waiting for either prices or fixed rates to give a little more ground.

Months of Supply

Supply tightened to 3.9 months from 4.1 in June and 4.1 a year ago. That is still balanced territory, but it is the firmest reading in several months. Conditions vary widely by property type: semi-detached homes remain the tightest market at 1.9 months, single-family homes sit at 3.2 months, and townhouses at 4.4 months. Condos improved from 8.8 to 8.3 months but continue to offer buyers the most choice and leverage. With water-capacity constraints still limiting new development approvals across the region, meaningful new supply relief is unlikely in the near term.

Sale Price as Percentage of List Price

The average sale closed at 99.5 percent of list price, down from 100.4 percent in June and the first month below full list since February. Semi-detached homes led at 102.1 percent, townhouses at 100.8 percent, and single-family homes at 99.9 percent. Condos remained the soft spot at 94.7 percent, meaning the typical condo seller is accepting more than five percent below their last list price. For sellers, the message is clear: the era of automatic over-asking results has paused, and pricing to the market matters more than it has all year.

The Bigger Picture: The Economy Behind Our Housing Market

All three forces we tracked last month moved in July: interest rates and oil, trade policy and local jobs, and institutional forecasts. Most of that movement helps clarify the fall setup.

Interest Rates: The Oil Shock Begins to Ease

The Bank of Canada held its policy rate at 2.25 percent on July 15, the sixth consecutive hold, with the next decision scheduled for September 2. Headline inflation reached 3.2 percent in May, driven largely by gasoline prices tied to the Middle East conflict, but core inflation remains near 2 percent and the Bank expects headline inflation to return to around 2 percent by early 2027.

The more encouraging news is on the fixed-rate side. Diplomatic progress toward reopening the Strait of Hormuz has pulled oil prices down from their June peaks, and while Government of Canada 5-year bond yields remain elevated at roughly 3.2 percent, the panic premium is starting to leak out. The lowest available 5-year fixed mortgage rates have edged down to about 3.94 percent insured and 4.04 percent conventional. If the de-escalation holds, fixed rates should have room to drift lower into the fall, which would be a meaningful tailwind for the buyers currently filling showing calendars.

The Trade War and Waterloo Region Jobs

Kitchener-Cambridge-Waterloo's unemployment rate improved to 8.5 percent in June from 8.7 percent in May, the first meaningful move in the right direction this year. It remains well above Ontario's major-city peers (Toronto sits at 7.2 percent) and the national average of 6.5 percent. The region's outsized manufacturing base, roughly 17 percent of the workforce, continues to absorb the brunt of US tariffs on metals, auto parts, and machinery, compounded by ongoing tech-sector restructuring.

The housing market read-through is unchanged from last month. Trade tensions are a genuine headwind on confidence and manufacturing-dependent incomes, but the other 83 percent of the regional economy, spanning healthcare, education, public services, construction, finance, and technology serving domestic demand, keeps overall housing demand from cracking. Record showing volumes alongside an 8.5 percent unemployment rate is not a contradiction; it is what a diversified economy looks like under sector-specific stress.

What CREA Now Expects

The Canadian Real Estate Association cut its forecast again on July 15. CREA now projects national sales will decline 1.4 percent in 2026 to 463,336 transactions, a reversal from the modest growth it forecast in April, with the national average price up just 1.1 percent to $686,710. The downgrade reflects the weak first half, the oil-driven spike in fixed mortgage rates, and slowing population growth.

The recovery has not been cancelled, just deferred. CREA expects sales to rebound 3.7 percent in 2027 with prices firming modestly, and economists point to affordability improvements in Ontario as the foundation for that recovery. This aligns with CMHC's earlier outlook of flat-to-slightly-negative Ontario prices in 2026 with pressure easing through 2027 and 2028.

Conclusion

July's numbers describe a market in a holding pattern: near-record shopping traffic, hesitant closings, and prices drifting within a well-defined band. For buyers, conditions have rarely been this comfortable, with ample selection in condos and townhouses, sellers accepting list price or below, and the prospect of cheaper fixed rates if oil continues to settle. For sellers, the bar has risen. With the average sale now closing just under list, market-appropriate pricing is no longer optional. The fall market will hinge on two dates: the Bank of Canada's September 2 decision and whether the Hormuz de-escalation holds. If both break the right way, the enormous pool of buyers currently touring homes has every reason to start writing offers.

Terry Riddoch

If you would like to talk through how any of this applies to a building you own or one you are considering, I am always happy to walk through the numbers.

Terry Riddoch
Real Estate Broker -- Multifamily and Investment Properties, Ontario

Phone: 519 591 1725
Email: [email protected]
Web: terryriddoch.ca

Sources:

• Bank of Canada: policy rate held at 2.25%, July 15, 2026 for the rate hold, inflation figures, and the September 2 decision date
• CP24: CREA now expects home sales decline in 2026 as it lowers forecast again for the sales, price, and 2027 forecast figures
• BNN Bloomberg: unemployment rates for June by Canadian city for the KCW 8.5%, Toronto 7.2%, and national 6.5% figures (Statistics Canada Labour Force Survey data)
• WOWA.ca mortgage rates for the lowest 5-year fixed rates (3.94% insured, 4.04% conventional as of July 31)
• Trading Economics: Canada 5-year bond yield for the 3.17% yield as of August 4
• Bloomberg: oil holds drop on signs of progress toward Hormuz deal and CNBC: oil prices fall as tankers exit Strait of Hormuz for the de-escalation narrative
• Cornerstone Association of Realtors
• CREA