Housing starts across Canada are expected to decline through 2028 as higher costs, weaker demand and elevated inventories — particularly in the condominium sector — weigh on new construction activity, according to Canada Mortgage and Housing Corporation.
In its latest Housing Market Outlook released recently, the federal housing agency said geopolitical and trade uncertainty, combined with slower population growth, will keep housing demand subdued nationally, though conditions will vary sharply by region.
At the national level, home sales are forecast to remain below historical averages, while prices are expected to post modest gains after declining in 2025. Elevated rental construction will continue to add supply, but that activity is also expected to moderate over the forecast period.
“We expect Canada’s economy to grow slowly in 2026, as many households and businesses remain cautious because of geopolitical and trade uncertainty,” said Kevin Hughes, deputy chief economist at CMHC. “This caution is leading many households to delay buying homes and making builders more hesitant to start new projects.”
CMHC Deputy Chief Economist, Kevin Hughes (CNW Group/Canada Mortgage and Housing Corporation (CMHC))
Hughes said the pressures will not be evenly distributed. “Stronger local conditions may help support housing market activity in Montreal and Calgary, for example, while weaker conditions could further slow housing demand and construction in Toronto and Vancouver,” he said.
Ontario, B.C. below long-term averages
CMHC projects construction and home sales in Ontario and British Columbia will remain below their 10-year averages, reflecting ongoing weakness in condominium markets and softer demand.
In Toronto, new housing starts are expected to stay low in 2026 as condominium starts continue to slow. Strong rental starts are projected to partly offset that decline. However, CMHC said higher vacancy rates and lower rent growth could pose challenges for future rental supply. Sales activity in the city is forecast to increase in 2026 but remain below historical norms.
Vancouver is expected to see housing starts continue trending downward as high construction costs and weakening demand weigh on new project activity, particularly in the condominium segment. As rental units launched over the past four years are completed and enter the market, vacancy rates are projected to remain elevated. That increase in available units is expected to put downward pressure on rent growth and dampen future rental construction.
The agency said elevated inventories of unsold homes, especially in condominium markets, are contributing to builder caution in several large urban centres.
Rental supply driving activity in Quebec, Prairies
In contrast, housing starts and sales in the Prairies and Quebec are expected to remain above historical averages, supported by relatively stronger local conditions.
Montreal is forecast to maintain high levels of construction activity in 2026 following record growth in 2025. Rental housing is expected to continue driving residential construction in the city. A strong increase in the supply of new units is projected to push the rental vacancy rate higher.
Calgary, after a period of rapid expansion and record housing starts in recent years, is expected to see new home construction moderate. Starts are forecast to decline from recent highs. As additional rental units enter the market, vacancy rates are expected to rise, slowing rent growth.
In Edmonton, housing starts are projected to decline moderately as inventories remain high and population growth slows. CMHC said markets there are returning to more balanced conditions. The arrival of new rental supply is also expected to push vacancy rates higher and moderate rent growth.
Capital region and Atlantic Canada easing
Ottawa is forecast to see the pace of housing starts slow in 2026 after reaching a historically high level in 2025. The rental market in the capital is expected to soften further as demand decreases, partly due to fewer international students and workers moving to the region.
Halifax, which experienced rapid population-driven growth in recent years, is also expected to see housing starts trend downward from historic highs. CMHC said the market is shifting toward more moderate conditions amid slower migration and easing construction activity. Despite softer demographic pressures, the agency forecasts that a strong labour market in Halifax will support modest increases in home sales and prices.
Demand remains subdued nationally
Across the country, CMHC expects overall housing demand to remain low in the near term. Sales are projected to stay below long-term averages as households contend with economic uncertainty. While prices are expected to recover modestly following declines in 2025, the agency does not anticipate a broad-based surge in activity.
Elevated rental construction has been a key driver of new supply in recent years. However, as vacancy rates rise in several major markets and rent growth slows, CMHC said rental development is likely to ease over time.
Hughes said economic caution is shaping behaviour among both consumers and builders.
“This caution is leading many households to delay buying homes and making builders more hesitant to start new projects,” he said, adding that the result will be differing outcomes across the country depending on local market conditions.
CMHC’s annual outlook provides forecasts for Canada as a whole and 18 major census metropolitan areas. The agency said regional differences will remain pronounced as economic uncertainty and shifting demographic trends continue to influence demand and construction decisions through the forecast period.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
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