Housing starts

Housing starts in Canada are projected to reach 243,749 units in 2026, representing a decline of 5.9% over the previous year and is due to elevated construction costs, growing unsold inventory particularly in condominiums, tighter financing conditions, and reduced housing demand from immigration policy changes. Economic weakness and trade policy uncertainty have further discouraged developers from launching new projects in major urban markets. This performance leaves starts well below the 2021 pandemic-era peak of 271,198 units but represents some 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.

The past five years witnessed extraordinary volatility in housing starts driven by pandemic-era policy interventions and subsequent monetary tightening. 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 5.6% expansion as interest rate relief gradually restored some market function.