Fall 2026 Housing Supply Report

Supply gap remains steady

Vancouver’s housing supply gap remained stable in 2026. Improving affordability from softer resale and rental market prices worked to narrow the gap, while anticipated population growth and slower projected housing supply growth had the opposite effect.

Rental housing is becoming the dominant form of new supply

Vancouver’s housing market is increasingly centred on rental development. Rental apartments accounted for around 60% of housing starts in 2026, compared with less than 20% in 2016. These units rose by roughly 36% compared to 2025.

Developers continue to favour rental projects because they carry less risk than condominium developments under current market conditions. Municipal incentives, rental-specific zoning policies, development charge relief and favourable financing programs have helped maintain rental project viability. Meanwhile, condominium projects continue to face significant presale and financing challenges.

The shift appears likely to continue. Pending starts remain high and concentrated in rental development, particularly within the City of Vancouver. As a result, Vancouver is positioned to see several more years of strong rental completions, which could continue easing pressure in the rental market.

Weak condominium construction threatens future ownership supply

While rental construction remains strong, ownership-oriented housing continues to weaken. After a weak 2025, condominium apartment starts fell 40% further in the first half of 2026, making this the weakest first half-year for new condominium construction since 2011.

The condominium market remains constrained by weak presales, high construction costs and growing inventories of completed and unsold units. Large concentrations of unsold inventory have emerged in Surrey, the City of Vancouver and Burnaby, with inventory growth particularly strong in Burnaby. While the gap remains stable, affordability challenges remain significant. Vancouver’s current pace of starts is still 5,000 to 7,000 units below what’s needed to restore pre-pandemic affordability levels by 2036. Additionally, since Vancouver already had affordability challenges in 2019, the narrowing gap still leaves more to be done to address affordability for lower-income households.

This weakness creates a long-term affordability risk. Condominiums have traditionally been Vancouver’s primary source of new ownership housing. If today’s low condominium starts lead to fewer completions in coming years, future buyers will likely face increased competition for a limited supply of ownership housing. This would place renewed upward pressure on prices even as rental supply continues to expand.

On the other hand, there are common themes across Canada's largest housing markets, especially in markets with a large supply gap, such as Toronto, Vancouver, Montréal and Ottawa:

• Current housing supply growth is increasingly driven by projects under construction, while new project launches have weakened in many markets.
• Rental market conditions are moving toward better balance as purpose-built rental construction adds supply and slows rent growth.
• Ownership-oriented housing faces growing supply challenges, particularly as condominium construction weakens.

These trends suggest that the near-term affordability improvements since 2023 may be difficult to sustain if housing construction doesn’t keep pace with future demand.

Need for more supply extends beyond the current market downcycle

While we assess affordability over a 10-year horizon, developers base construction decisions on near-term expectations for demand, absorption, financing conditions and profitability. We expect slower demographic growth to weigh on new project launches in the near term. However, stronger household formation, income growth and improving affordability should provide more support for housing demand over the next decade. The key risk is that there isn’t enough new supply when housing demand strengthens again.

In the next 2 years, we expect housing demand to be weaker than it was during the post-pandemic period. Lower immigration targets and fewer temporary residents are expected to slow population growth, reducing demand for both rental and ownership housing. Buyers and investors are also expected to remain cautious because of weak price growth expectations.

However, housing supply needs will increase over the long term. Population growth is expected to recover across most major cities, and rising incomes will support housing demand. As a result, there will be a need for more homes. Some households may have delayed forming because of affordability challenges. As conditions improve further, some of this suppressed demand will re-emerge.

Meeting future housing demand will depend on the pace of new construction. Construction costs remain high. Presale financing conditions remain difficult for some projects. Weak condominium market conditions continue to make developers cautious about launching new projects.

At the same time, several policy measures are helping support housing supply. Government financing programs, lower or deferred development charges, and zoning reforms are improving the financial viability of some projects, particularly in purpose-built rental housing.

These trends suggest that housing demand will likely strengthen over time, while supply may respond more slowly. Restoring affordability will require not only more housing, but the right mix of housing to meet future needs.

Elevated rental construction masks insufficient ownership construction

Purpose-built rental housing now accounts for two thirds of all apartment starts in key markets. Current rental market data points toward market normalization rather than widespread oversupply. Rising vacancy rates and slower rent growth are helping rental markets move toward better balance between supply and demand after years of unusually tight conditions. This easing is most evident in the newer, more expensive segments of the market.

At the same time, condominium and ground-oriented construction has weakened sharply in major cities including Toronto, Vancouver, Ottawa and Montréal. These units have historically provided an important source of both ownership and secondary rental housing. In addition, our estimated housing supply gap is increasingly concentrated in the ownership market.

As a result, the greater long-term risk may not be excessive rental construction. Instead, it may be insufficient condominium and ground-oriented housing supply that leaves too few ownership options when demand strengthens again.

Canada's housing challenge persists despite some improvements in market conditions

While many of the forces that add to housing affordability pressures are easing, we expect weaker housing demand to combine with even slower construction.

Canada faces an annual supply gap of 187,000 to 238,000 homes to restore pre-pandemic affordability levels by 2036. Canada still needs roughly twice as much housing construction as is currently projected to improve affordability over the next decade.

¹The range reflects varying assumptions about how strongly homeowners and renters respond to lower housing prices, with the lower end reflecting the lowest statistically plausible level of responsiveness.

Edmonton remains generally affordable, but lower-income households still struggle to find affordable housing

Edmonton remains one of the few major Canadian housing markets with no measured housing supply gap to restore pre-pandemic affordability levels. Construction activity has generally kept pace with demand, helping the region maintain stronger affordability than most large metropolitan areas.

Although no additional supply is needed in market housing, there are continuing challenges for the lowest-income households still dealing with issues like homelessness, as indicated in our 2025 report on housing supply gaps estimates.

Market shifts from start growth to project delivery

Edmonton’s housing market moderated in the first half of 2026 following 2 years of record construction activity. Total housing starts declined 20% compared to 2025 levels. Despite the decline, the level of new construction remains above historical averages.

The slowdown reflects softer market conditions, especially in the rental market. Rising vacancy rates, slower lease-up activity and broader economic uncertainty have encouraged developers to become more selective about launching new projects.

At the same time, the development pipeline remains substantial. Apartment completions increased 30%, while units under construction rose to a record high 17,900 units. As a result, housing completions will continue to remain high in the near term even as new project launches slow down.

Condominium construction remains resilient

In contrast with other major markets, Edmonton saw an increase in condominium apartment starts. Compared to the same timeframe in 2025, they rose 14% in the first half of 2026, while the completed unsold inventory of this housing type fell by almost half.

Condominium apartments accounted for nearly one quarter of apartment starts, up from only about 3% in 2023. These apartments still offer an attractive homeownership option for many first-time homebuyers and households downsizing from larger detached homes. For the condominium segment to continue growing in Edmonton, these units need to remain attractively priced for these buyers.

Supply gap narrows

Calgary is one of the few major Canadian markets where the housing supply gap to restore pre-pandemic affordability levels has narrowed. Years of record housing starts have allowed supply to outpace demand. As a result, Calgary now needs between 4,000 and 5,000 additional units annually over the next decade to restore affordability.

Market shifts from rapid housing start growth to project delivery

After 3 years of record housing starts, Calgary’s housing market moderated in the first half of 2026. Total housing starts declined more than 20%, with every dwelling type recording lower activity. Despite the decline, 2026 starts were above recent historical averages.

Completions increased 9% compared to last year, led by a roughly 32% increase in apartment completions. Meanwhile, units under construction remained elevated near recent record highs.

Current completions reflect development decisions made 2 to 3 years ago, when market conditions were considerably tighter. In contrast, today’s lower starts reflect more recent rising vacancy rates, growing inventories, higher construction costs and broader economic uncertainty. As a result, we expect supply growth to moderate once the current development pipeline is delivered.

Rental construction slows while ownership demand remains resilient

Purpose-built rental housing drove Calgary’s recent construction boom, but this segment is now leading the market slowdown. Rental starts fell more than 30%, while still accounting for almost 60% of all starts.

Signs of softer rental market conditions have become more widespread. Developers report rising numbers of unleased units, increased use of incentives, and unchanged or lower asking rents, as seen in our mid-year rental market update. Some projects have been delayed, redesigned or cancelled as leasing conditions weaken.

At the same time, ownership demand has remained more robust. Condominium apartment starts increased 4%. Completed unsold condominium inventory fell by 59%, and several new condominium projects launched during the second quarter of 2026. The demand for relatively affordable ownership housing remains strong even as rental market conditions soften.

Weaker Rental Demand Is Driving Housing Starts Down as Completions Rise

Supply gap narrows marginally, but more housing supply needed for sustainable affordability improvements

Housing affordability in Toronto has recently improved as declining home prices and slower rent growth have reduced pressure on household budgets. These affordability improvements have marginally narrowed the gap between current affordability and pre-pandemic levels.

These factors reflect softer current market conditions rather than sustainable affordability improvements. Toronto still needs to increase the current pace of annual housing starts by at least 50% over the next decade to return to 2019 levels of affordability.

Population-adjusted housing starts in the first half of 2026 were the lowest since 1996, excluding 2025. The inventory of permitted units awaiting construction has fallen 50% from its 2023 peak. Condominium project launches have also largely stalled. Toronto’s housing starts are trending down at a time when it needs between 21,000 and 26,000 more starts every year for sustainable affordability improvements.

Ownership housing faces the greatest supply gaps

New supply remains limited across both major ownership housing types. Ground-oriented freehold home starts are at record lows after more than 2 decades of decline. New condominium apartment construction has also collapsed amid weak presales, poor investor demand and high resale supply. In the City of Toronto, only 156 condominium units were started in the first half of 2026, compared to an average of 7,000 units annually over the previous decade.

Rental construction drives new supply

In the first half of 2026, purpose-built rental apartment starts increased 82% compared to 2025. This was the only housing category in which starts grew, with support from government financing programs, municipal incentives and the conversion of some proposed condominium projects to rental housing.

Rental apartment starts were higher than condominium apartment starts for the first time since 1994. A growing rental pipeline has helped bring greater balance to Toronto’s rental market, as seen in our 2026 Mid-Year Rental Market Update. However, slowing condominium completions will reduce an important source of secondary rental supply in coming years. This will place renewed pressure on rents and vacancy rates, which have shown signs of easing.

As Figure 1 shows, the decline in condominium starts is not offset by the record high number of rental unit starts. Toronto still needs a further boost to rental supply and growth in ownership housing.

Housing supply remains high while affordability gap widens

Ottawa continues to face a substantial housing supply gap despite maintaining elevated construction activity. Even at their current high levels, starts are still below the annual pace needed to restore affordability to 2019 levels by 2036. The gap has widened because of a decline in affordability driven by higher mortgage rates and slower income growth.

Ottawa needs between 22,000 and 27,000 additional annual housing starts over the next decade to restore 2019 affordability levels.

Rental housing dominates Ottawa’s supply pipeline

Purpose-built rental housing has become Ottawa’s primary source of new housing supply. Rental units accounted for 54% of housing starts in 2026, while condominium apartment units represented just 12% of starts. Rental apartments also accounted for 64% of completions and 69% of units under construction, up from 53% a year earlier and 30% in 2023.

The shift toward rental housing reflects current market economics. Rental apartment starts increased 3% year over year, while condominium apartment starts fell 49%. High construction costs, financing challenges, weak presales and affordability constraints continue to prevent many condominium projects from reaching the sales thresholds required to proceed. New downtown condominiums can cost roughly the same as suburban townhouses that offer much larger living spaces.

Rental supply should continue growing in the near term, as noted in our Housing Market Outlook Update for 2026. Rental apartment completions rose 64% in the first half of 2026, compared to last year and Ottawa’s inventory of pending rental starts is at a record high. However, these pending starts also suggest that many approved projects are being delayed while developers wait for improved financing conditions, lower costs or greater market certainty.

A strong pipeline supports near-term supply, but ownership challenges remain

Ottawa’s construction pipeline remains one of the largest in Canada. The number of units under construction is at an all-time high. Completions in the first half of 2026 were 22% higher than a year earlier.

Governments are also pursuing measures to support future housing development. Ottawa recently approved participation in Ontario’s Development Charge Reduction Program, which will reduce fees on new construction. In addition, a new city-wide zoning bylaw allows up to 4 units as-of-right on most serviced residential lots, increases density allowances and streamlines approvals near transit corridors.

These measures should help support long-term supply growth. However, because Ottawa’s new construction is concentrated in rental housing, ownership affordability challenges are likely to persist unless more condominium and ground-oriented housing projects move forward.

Supply gap remains large despite strong construction activity

Montréal’s housing supply gap remains wide. This census metropolitan area (CMA) still needs more than triple its current annual rate of housing starts to restore pre-pandemic affordability levels by 2036. Despite the growth in new housing starts, units under construction and completions in 2026, the gap to reach 2019 affordability has widened. This is because price growth has reduced affordability more than supply growth has been able to improve it.

Affordability has deteriorated significantly since 2019. Montréal’s cost-to-income ratio has increased from 34% to 48%, its highest level since the 1990s. Higher projected mortgage rates and slower income growth could lead to further affordability decline unless housing starts increase by between 42,000 and 56,000 annually over the next decade.

Rental construction increasingly driving new supply

Rental housing continues to be Montréal’s primary source of new supply. Rental units accounted for a record 86% of all housing starts in the first half of 2026. Condominium apartments and ground-oriented ownership starts remained near multi-year lows. Purpose-built rental projects continue to benefit from government financing programs and municipal incentives that have helped projects remain viable despite high construction costs and interest rates.

This construction surge in recent years is translating into record rental completions in 2026. We expect vacancy rates to continue rising in the short term as projects move toward completion.

However, new supply is concentrated in higher-rent segments because projects still require rents that are high enough to support construction costs. As a result, low vacancy rates for more affordable rental housing may persist even as overall rental supply expands. Pending starts have also declined in recent months, particularly on the Island of Montréal. This means that the current supply boost may prove temporary as the development pipeline gradually thins, which could lead to further affordability decline.

Weak condominium apartment construction limits ownership options

Ownership housing remains constrained by weak condominium development. Over the last 10 years, condominiums have provided more than 60% of new homeowner unit starts. In 2026, they represent 40% of such starts, as fewer new condominium apartment projects have been launched.

Condominium starts remain near multi-year lows. New projects, particularly in downtown Montréal, have declined because new condominium demand has declined. New condominium prices are as much as 40% higher than comparable resale market units.

We expect condominium construction to remain weak over the near term due to viability challenges for developers struggling to balance construction costs and prices the market will absorb. As a result, homeownership unit supply will likely remain limited.

Record construction is improving housing market conditions but affordability remains a challenge

Years of elevated housing construction are improving conditions in Halifax's rental market. Record apartment completions have increased the supply of available units, contributing to rising vacancy rates and more moderate rent growth. Rental units now dominate the market, accounting for 78% of all housing starts and 89% of all units currently under construction.

These gains have eased pressures for many renters. However, affordability challenges remain, especially for lower-income households who cannot afford the newer units.

Affordability challenges also persist in the homeowner segment, where incomes haven’t kept up with the price growth seen since 2019. Because most new homes being built are rentals, the high number of total housing starts can hide a thinning supply of ownership units. This could make owning a home less affordable as future buyers compete for a limited supply after years of weakened starts.

Halifax’s next challenge: sustaining future housing supply

The largest risk to Halifax's long-term affordability outlook is the ability to maintain housing production once the current development pipeline is completed. Units under construction reached a record 14,400 in the first half of 2026, compared with fewer than 5,900 units in 2021. These projects will continue supporting supply growth in the near term.

However, several indicators suggest future supply growth may slow. In addition to financing and building capacity, the limits of infrastructure capacity — particularly water and wastewater servicing systems — are weighing on development activity. Infrastructure limitations are increasingly influencing where and how much housing can be built, particularly near key transportation corridors.

As a result, Halifax's long-term affordability outlook will depend not only on maintaining strong housing construction levels, but also on expanding infrastructure to support future population growth and housing development. Without continued growth in both rental and ownership-oriented housing supply and underlying infrastructure, recent affordability improvements will likely prove difficult to sustain.