Housing starts

Housing starts in Canada are projected to reach 253,931 units in 2025, representing growth of 3.5% over the previous year and marking a modest recovery from the cyclical trough experienced in 2023. This performance leaves starts 6.4% below the 2021 pandemic-era peak of 271,198 units but represents substantial improvement from the 240,267 units recorded in 2023 when elevated interest rates and deteriorating affordability devastated new construction activity. The current level remains dramatically insufficient relative to Canada's housing needs—expert consensus estimates the country requires between 550,000 and 700,000 new housing units annually to adequately house population growth and address accumulated supply deficits, meaning 2025 production will fall short by approximately 300,000-450,000 units.

Recent monthly data reveals considerable volatility but generally positive momentum heading into late 2025. September 2025 housing starts surged 14% month-over-month to a seasonally adjusted annual rate of 279,234 units—the highest pace since 2022—driven by exceptional multi-unit construction gains in Toronto and Montreal where starts more than doubled year-over-year. The six-month trend measure increased 4.1% to 277,147 units, with year-to-date starts through September totaling 178,033 units, up 5% from the same period in 2024. This improving trajectory reflects Bank of Canada interest rate cuts that began in June 2024, which have reduced borrowing costs and improved project economics for developers while increasing buyer affordability and market confidence.

The past five years witnessed extraordinary volatility in housing starts driven by pandemic-era policy interventions and subsequent monetary tightening. Housing starts increased 4.4% in 2020 to 217,880 units as initial pandemic disruptions were offset by emergency interest rate cuts and government support programs that maintained developer confidence. Activity exploded 24.5% in 2021 to reach an all-time record of 271,198 units as historically low mortgage rates, remote work trends driving housing demand and accumulated household savings fueled an unprecedented buying frenzy that prompted developers to launch projects at exceptional pace.

This boom proved catastrophic once the Bank of Canada began aggressive monetary tightening in early 2022. Starts declined 3.5% in 2022 to 261,849 units as rising rates began dampening demand, then collapsed 8.2% in 2023 to just 240,267 units—the lowest level since 2014—as mortgage rate shock killed affordability and froze markets across the country. Recovery began modestly in 2024 with 2.1% growth to 245,367 units and continued in 2025 with 3.5% expansion as interest rate relief gradually restored some market function.