Strong rental construction pushed Canada’s housing starts higher in 2025, but a slowdown in projects aimed at homebuyers is raising concerns about future ownership supply, according to a new report from Canada Mortgage and Housing Corporation.
The agency said total housing starts rose six per cent year over year, driven largely by record rental apartment construction and growth in so-called “missing middle” housing such as multiplexes, row homes and stacked townhouses. However, falling condominium presales and tighter financing conditions for builders are creating risks for the pipeline of ownership units.
Rental construction drives gains
CMHC said the resilience of homebuilding activity last year was underpinned by record rental construction in Calgary, Edmonton, Ottawa, Halifax and Montréal, along with the second-highest level of rental construction on record in Toronto. Across the seven major census metropolitan areas covered in the Housing Supply Report, starts for medium-density housing rose about 10 per cent.
“On the surface, housing starts last year were quite strong, outpacing annual starts in 2024 and led by historic levels of rental starts and completions. This new supply has contributed to the easing of rental market conditions in many of Canada’s major centres,” said Tania Bourassa-Ochoa, deputy chief economist at CMHC.
Despite those gains, the report said supply intended for the ownership market weakened overall. Builders are delaying or cancelling projects — or converting them to rental developments — as softer buyer demand and tighter financial conditions weigh on new construction decisions.
Tania Bourassa-Ochoa
“However, homeownership supply, particularly in the condominium segment, continues to face significant challenges in the face of falling presales. This threatens both the availability and affordability of ownership options for Canadians in the medium-term. Since construction timelines can span years, a slowdown in starts today sets the stage for future supply constraints,” Bourassa-Ochoa said.
Regional trends highlight shifting priorities
In Toronto, rental starts exceeded condominium starts for the first time this century in the City of Toronto, a shift mirrored across the broader region. Builders increasingly favoured smaller projects with three to five units over larger developments with more than 100 units.
While total starts declined compared with recent years, completions remained elevated, easing near-term market conditions but potentially setting up a sharper supply gap in the longer term.
Vancouver also saw housing market conditions ease in 2025 as slower population growth reduced demand at the same time record numbers of units were completed. However, high land costs and limited availability constrained new projects, while weak presales weighed on condominium development. CMHC pointed to stronger growth in missing middle construction as a notable positive trend, supported by densification policies.
In Montréal, rental construction dominated activity, accounting for more than 80 per cent of housing starts and reaching record levels, while condominium starts fell to a record low. Although current supply conditions are relatively abundant amid weaker demand, CMHC said declining starts could eventually tighten affordability as completions fall and demand recovers.
Prairie markets post record activity
Calgary recorded another record year for new home construction, surpassing both Toronto and Vancouver in total housing starts. Growth was led by rental and medium-density housing, supported by favourable financing conditions and zoning reforms.
The report said labour shortages and limited building capacity are becoming more persistent in the market, lengthening construction timelines and increasing risks to future supply.
Edmonton also posted record housing starts, buoyed by government incentives, rezoning efforts and relatively strong affordability. Unlike many other large markets, the city saw gains in both rental and ownership construction, including condominium projects. High completion levels and more resale listings boosted overall inventory.
Incentives shape activity in other regions
In Ottawa, rental units dominated new construction, pushing total housing starts close to record levels. Incentives tied to transit-oriented development helped drive activity, while conversions and other medium-density projects contributed to stronger results.
CMHC said much of the current supply reflects investment decisions made under more favourable financing conditions in previous years. More recent starts have begun to trend lower, suggesting supply could tighten over time as economic conditions improve and demand returns.
Halifax experienced more balanced housing market conditions in 2025, with strong completions and higher resale listings meeting softer demand. Construction activity remains focused on rental housing and developments near urban transit hubs, although builders operating near full capacity are facing delays and postponements due to skilled labour shortages.
Long-term supply risks emerge
Overall, CMHC said the surge in rental construction has helped ease market conditions in the short term, particularly in large urban centres. However, the agency warned that weakening ownership construction could create supply constraints in future years if current trends persist.
With project timelines often stretching over several years, today’s slowdown in ownership-focused starts could shape market dynamics well into the next economic cycle, affecting both availability and affordability for prospective homebuyers.
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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