Giles Barnes opened the scoring early and the Houston Dynamo added two insurance goals late in the second half to beat the Impact 3-0.
"There were moments when our decision-making was not there even though we had a lot of possession," said Montreal coach Frank Klopas. "We had a lot of the ball and had some good chances, but the final pass in the final third just was not there."
Barnes headed home Brad Davis' free kick in the 15th minute, ending Houston's 274-minute scoring drought. Ricardo Clark doubled the lead for Houston in the 72nd minute and Rob Lovejoy capped the scoring in the 80th.
The Dynamo (2-2-2) snapped a four-game winless streak.
"It felt like the first half we possessed the ball really well, but the second half we gave the ball away too easily," said Impact defender Donny Toia. "Stupid, silly mistakes are costing us goals right now and we have to change that."
Tyler Deric earned his third shutout of the season with five saves.
The Impact (0-2-2) remain out of rhythm in the MLS season while in the middle of their historic run to the CONCACAF Champions League final. Montreal travelled to Costa Rica for the second match of the CCL semifinals Tuesday night and beat Alajuelense with the away-goals tiebreaker.