Incorporating the magnetic core material in a lumped-element transformer model generally results in a nonlinear network with hysteresis. This network can be solved subsequently in time domain, yielding the transient response of the transformer. To directly obtain the steady-state solution, the method of harmonic balance is superior to such a transient analysis since it is a frequency domain approach capable of handling nonlinearities. For this reason, harmonic balance is derived theoretically and further applied to a dedicated single-phase transformer network based on a mutual and leakage flux approach. The nonlinear network element is represented by an energy-based dry-friction-like hysteresis model depicting the core material of the transformer. Finally, the results of harmonic balance are compared to measurements and the algorithm's efficiency is discussed.