Fall 2025 Housing Supply Report

Combined housing starts remain stable in Canada’s 7 key markets, with significant regional differences

The combined housing starts in Canada’s 7 major CMAs held steady in the first half of 2025, matching near-record levels from the same period in 2024. However, this overall strength masks significant regional variations and emerging trends.

Housing starts rose across Calgary, Edmonton, Montréal and Ottawa, led by rental apartment construction. Calgary and Edmonton also saw more ground-oriented starts, supported by comparatively lower ownership costs and better affordability.

When adjusting for population, Calgary stood out with the highest number of housing starts per 10,000 residents – almost a record high. Montréal also saw an improvement, although its population-adjusted starts continued to trail most other key markets (Figure 1).

By contrast Halifax, Toronto and Vancouver saw declines. Toronto saw the steepest drop across all housing types as both end-user and investor demand weakened, triggering a broad-based construction slowdown. On a per capita basis, Toronto’s homebuilding activity fell to its lowest point since 1996, ranking last among the 7 CMAs.

Modest rise in ground-oriented construction led by more affordable markets

Across the 7 CMAs, ground-oriented starts rose modestly by about 5% in the first half of 2025 compared to the same period in 2024. Lower mortgage rates unlocked some pent-up demand but remained high relative to levels in 2020-2021, keeping affordability tight and recovery modest.

Activity improved noticeably in more affordable markets like Calgary, Edmonton and Montréal. However, in pricier centres, the picture was different. Ground-oriented construction held steady in Ottawa and Vancouver but declined year-over-year in Toronto and Halifax.

The limited rebound in higher-priced markets like Toronto and Vancouver also reflects weaker move-up activity. Many sellers struggled to sell their starter homes due to fewer first-time buyers entering the market. Others remained cautious amid economic uncertainty and higher ownership costs when trading up.

Halifax’s ground-oriented construction faced additional challenges, including delays and added costs, which often made projects unfeasible.

Rental construction dominates apartment starts as condominium activity slows

Apartment construction (includes both condominium and rental) remained the dominant form of new housing, accounting for 70% of starts. This is a slight dip from the same period in 2024. Overall, apartment starts across the 7 CMAs edged down 2% in the first half of 2025, as decreases in the condominium segment outweighed gains in rental construction.

Purpose-built rentals make up a growing share of apartment starts

Purpose-built rental apartment starts rose significantly through mid-2025. However, Toronto and Vancouver diverged from this trend, posting declines of around 10%. Despite these drops, rental construction in both CMAs remained above their 10-year averages. Purpose-built rentals now account for a growing share of total apartment construction (Figure 2).

This growth in rental starts in the first half of 2025 was largely driven by record immigration inflows and strong rent growth expectations during the planning stages, even though immigration has recently slowed.

Interestingly, some developers who traditionally focused on condominiums have shifted toward purpose-built rentals. They are attracted by the lack of presale requirements, which has become a growing challenge in the condominium market.

Government support has also been crucial in enabling these rental projects. CMHC’s construction financing programs backed an estimated 88% of new purpose-built rental starts across Canada in 2024, making many of these developments feasible.

Investor pullback slows condominium construction

Mid-2025 data show declines in condominium apartment starts across all markets except Edmonton and Ottawa. The decline was particularly pronounced in Toronto, where a pullback in investor demand during the first half of 2025 reduced project feasibility, leading to cancellations, delays and a sharp drop in starts.

This pullback follows a surge in presales in 2021–2022, driven by near-record-low interest rates and strong rental demand that attracted investors to Toronto’s condominium market. That surge triggered a wave of condominium completions over the following years. These newly finished units increased resale supply and reduced the immediate need for new homes. As a result, pre-construction sales slowed, limiting new condominium apartment starts in the first half of 2025.

Differences in project size further shaped regional variations in condominium apartment starts. In Calgary and Edmonton, apartment projects were typically smaller and often included stacked townhomes (Figure 3). This made it easier to meet presale thresholds and secure financing amid softening investor demand. In contrast, larger projects in Toronto struggled to hit presale targets, delaying many developments. Projects that started in 2025 generally had fewer units than in previous years.

Purpose-built rental construction is expected to continue outperforming condominiums. This is supported by projected growth in rental demand. However, builders' sentiment in the rental segment weakened in 2025. In CMHC’s Canadian Rental Construction Survey, developers cited rising financing challenges and tariffs on materials squeezing profit margins. To ensure financial viability, more developers are choosing longer-term strategies, like developing and holding on to their rental assets and seeking longer amortization periods.

Recent years' housing start highs boost housing stock

Unlike housing starts, which signal future supply, completions represent actual additions to the housing stock – homes people occupy. Completions dipped slightly across the 7 CMAs in the first 6 months of 2025 but stayed near record highs.

As noted in our recent 2025 Mid-Year Rental Market Update, strong growth in purpose-built rental and condominium apartment completions has boosted rental supply in large CMAs. Combined with demand headwinds, this has led to softer market conditions, with landlords reporting longer lease-up times and declining asking rents.

In Toronto and Vancouver, many recent completions were investor-owned condominium apartments, leading to a notable increase in resale supply. This contributed to softer market conditions and declining prices.

However, despite signs of adequate supply in the short term, long-standing affordability challenges persist due to structural undersupply. Lasting improvement will require sustained growth in construction. According to the report Canada’s Housing Supply Shortages: Moving to a New Framework, starts must rise by about 30% in Vancouver and 70% in Toronto over the next decade to restore pre-pandemic affordability.

With starts remaining stable, what’s next for Canada’s key markets?

Despite a steady first half, combined housing starts for the 7 key markets in 2025 are expected to fall below 2024 levels. This is consistent with what we’re hearing from the industry. In the second quarter of 2025, the Canadian Home Builders' Housing Market Index – which reflects builder expectations for pre-construction sales over the next 6 months – remained near historic lows. Confidence was especially weak in Ontario and British Columbia, and declined even in the Prairies, where market conditions are still robust.

Builders continue to cite persistent supply-side pressures that are eroding project viability and slowing new development. These include rising construction costs, high development charges, tariff-related disruptions and limited municipal infrastructure. These challenges make it harder to secure financing and are delaying new project launches.

We expect only a slow and marginal rebound for the 7 key markets combined over the next 2 years. This rebound will take shape mostly in 2027, according to the Summer Update: 2025 Housing Market Outlook. The timing and scale of recovery will vary widely across the key markets:

• Toronto remains the hardest hit. As of mid-2025, it’s on track for its lowest level of housing starts in 30 years. Pre-construction sales continue to decline by double digits, prompting developers to delay launches and scale back land acquisitions. Only a marginal recovery is expected in 2026 and 2027, keeping construction activity well below historical levels.
• Vancouver is also expected to see a further decline in total starts in 2025. However, a gradual recovery by 2027 should bring activity closer to its 10-year average.
• Montréal is expected to outperform – with a recovery already underway in 2025 – led by strong purpose-built rental construction. While further growth isn’t anticipated, current momentum is expected to be sustained.
• Edmonton and Calgary are on track for record-high starts in 2025 and remain the most resilient key markets. However, some moderation is anticipated in 2026 as activity levels normalize.

Short-term construction slowdowns may pose lasting risks

The decline in construction observed in some markets could persist beyond the short term and lead to long-term challenges. In particular, the drop in ground-oriented construction in high-cost markets may signal a lasting decline in homeownership rates and a prolonged slowdown in housing starts.

If rental construction fails to keep pace, rental affordability could worsen. This risk is likely mitigated in the short term, as purpose-built rental construction in 2025 is expected to surpass earlier forecasts in several CMAs, with many projects continuing to break ground.

The slowdown in housing starts could also have lasting effects on the construction workforce and the broader economy. Signs of softening are already visible in some regions, and prolonged weakness may lead to deeper job losses and workers shifting to other sectors. This situation would make it harder to ramp up activity when demand recovers. Additionally, project cancellations and slower land acquisitions could limit developers’ ability to quickly scale up once conditions improve.

Condominium apartment market weakness constrained housing supply

Condominium apartment starts fell 13.4% in the first half of 2025. These apartments represented more than half of all starts in 2024. Weak pre-construction sales over the last few years have led to the cancellation and pausing of projects that have failed to meet the necessary 70% threshold for financing.

Industry sources suggest some developers are now even reducing staff and shifting toward smaller, and more manageable projects. These cancelled projects threaten to further tighten an already tight housing market.

Multi-unit housing starts shifted toward rental

While multi-unit housing starts fell in the first half of the year, rental apartment starts made up a larger proportion of those starts. Many developers moved from struggling condominium projects to new rental construction projects due to the availability of rental apartment financing programs (PDF).

This trend is particularly obvious in New Westminster, where the composition of multi-unit housing starts has shifted significantly. In 2025, most multi-unit housing starts have been rental apartments.

The addition of new rental supply should alleviate some of the pressure in Vancouver’s very tight rental market.

The province and city are working to remove barriers to accelerate housing supply

The province is making amendments to development cost charges to ease financial pressure on developers and accelerate housing supply. These changes allow for the deferment of 75% of development-related payments until occupancy approval. They will take effect on January 1, 2026. Development and amenity cost charges are major development barriers.

There are an estimated 100,000 approved homes currently stalled due to difficulties resulting from these charges. These amendments aim to unlock the housing supply by reducing upfront cost burdens.

The city is also implementing a new development approval process to streamline rezoning and accelerate housing delivery. This would allow residential projects aligned with the City’s Official Development Plan to bypass public hearings, expediting the approval process. Reducing approval timelines would reduce project costs and the risk associated with rising material and labour costs.

Weak home sales are allowing resale supply to grow

Weak home sales in 2025 due to trade and economic uncertainty have dampened sales activity. This situation resulted in a greater number of new and active listings as some sellers try to capitalize on high house prices. This number is now well above historical averages and the listings are adding to the supply of homes available to buyers.

Multi-unit housing construction leading growth

There was robust growth in housing starts in the first half of 2025 because of increases in both multi-unit and single-detached homes. The CMA’s relative affordability kept developers feeling optimistic despite the trade and economic uncertainty that has resulted in fewer starts in other parts of the country. Also, the availability of both greenfield and infill development opportunities has allowed more construction in favourable locations for developers.

Rental apartments continue to represent a significant share of these multi-unit housing starts. Strong demand has continued to encourage development, particularly in higher-end units where rent growth has been the greatest. However, there are signs that development is being restricted by the builders’ capacity to find the necessary skilled labour to maintain the strong growth in residential construction.

New home inventory levels remain flat despite strong demand

Inventory of all dwelling types remained flat in 2025. Although construction contributed to a higher volume of housing, demand remained robust, with newly completed units quickly absorbed. Edmonton’s relative affordability and steady population growth have supported both supply and demand for housing.

City of Edmonton advances strategic plans to boost housing supply and downtown growth

The city is implementing initiatives to support housing supply and revitalize its downtown core. The new Downtown Action Plan aims to upgrade infrastructure and public amenities to allow more home building in core neighbourhoods.

The council also approved rezoning that targets corridors and nodes near transit. These changes would allow medium-scale residential development of up to 8 storeys in traditionally lower-density areas. The changes encourage higher-density housing and mixed-use developments that would allow more affordable housing supply.

Positive builder sentiment has kept housing starts high

Total starts increased in the first half of 2025. Positive builder sentiment persisted despite the headwinds of economic and trade uncertainty. Multi-unit housing developments led the growth as increases in single-detached home prices saw developers turn to more affordable multi-unit housing options for homebuyers.

Relative affordability and strong population growth in the province continued to make building attractive despite prevailing weakness in buying activity. There was notable growth in the supply of multi-unit housing, particularly semi-detached units. This growth was most pronounced in the southeast and northwest areas.

Rental apartment starts continued to grow and outpaced condominium construction, particularly in neighbourhoods near the city centre where rental markets are tightest. The share of rental starts set a record. This reflects favourable rental financing programs, supportive zoning changes and heightened development plans in recent years.

Municipal policies support new home construction efforts

Updated municipal zoning is supporting lane housing, secondary suites and row housing. This has facilitated development and enabled greater density in established areas. Initiatives to support construction could further boost builder sentiment by providing an incentive to initiate new projects.

Recently, the city approved 10 additional office-to-residential conversion projects in the downtown core, supported by municipal funding and the Housing Accelerator Fund. These projects are expected to deliver 1,100 new multi-units. This will increase the number of approved conversions and add over 2,600 homes.

The city also amended bylaws to exempt row homes from development permits in new communities. This measure is intended to accelerate construction of ground-level, multi-family housing. It will take effect in the third quarter of 2025 and apply to areas identified in the city’s growth plans.

Slow sales increase resale market housing supply

Weak sales this year have led to an increase in the number of houses available for sale. While active listings have grown compared to previous years, much of the new supply is in higher price ranges. This has underscored the uneven availability of housing where the most affordable segments of the market remain tight.

Starts continued to trend up supported by rental apartment construction

Housing starts increased in the first half of 2025. Laval and the North Shore stand out so far this year with housing starts more than doubling over this period. As housing demand weakened in Downtown Montréal, construction activity became more concentrated in the suburbs where developers could still see opportunities for profitable new developments. The focus on the suburbs brought new housing supply to areas with potential for increased density.

On the Island of Montréal, where there was a decline in rental apartment and condominium starts over the past year, there is still a high volume of rental apartment units under construction. Once completed, these units will increase the housing supply in this zone over the coming quarters.

Slowdown in the condominium apartment market has become quite evident

The number of condominium units under construction has plummeted since mid-2024 and was at its lowest in 15 years at the end of June 2025. Prices of newly built condominium units have become too high for what potential buyers are willing to pay and developers are moving away from this unit type as a result. Buyers looking for homeowner condominiums are turning to the resale market where prices are lower.

Overall, the resale condominium market is tight, except for Montréal (Ville-Marie), where about 25% of new and existing condominiums for sale in the CMA are located. Market conditions in this area favour buyers given the high supply.

However, these units remain out of reach for many, given their unaffordable prices. Some of them may end up being offered on the higher end of the rental market if they do not sell.

Elsewhere in the metropolitan region, new listings of condominiums as well as single-family homes have followed a gradual upward trend. However, this growth in housing supply has remained slow relative to demand, keeping the market notably tight, especially in the most affordable segments.

Prohibitive costs limit housing supply growth

So far, the trade conflict with the United States doesn’t seem to have significantly impacted new rental apartment construction. Tariffs had a moderate impact on construction costs, but inflation and financing rates were lower than they were a year ago – providing building support. Despite this, construction costs remain high overall and are challenging for many developers within the housing sector. Their level still limits growth in housing starts and supply.

Resale supply remains tight as demand matches growth in listings

Except for Downtown Montréal’s condominium segment, conditions on the resale market remain tight across the region. New listings for sale have only marginally outpaced demand. The CMA’s relative affordability has kept sales strong and restricted the amount of housing available through the resale market.

Market downturn for new condominiums worsened

Among Canada’s largest cities, Toronto was the epicentre of weakness for residential construction in the first half of 2025. While all housing types in the region posted annual decreases over this period, the condominium apartment segment – facing ongoing struggles – was the largest drag on activity.

Total housing starts fell 44%, reaching their lowest level since 2009 (or 1996 on a population-adjusted basis). This was led by a notable 60% drop in condominium apartment starts. With 70% pre-construction sales required, record low sales limited the ability of condominium developers to secure the financing needed to break ground on new projects.

Industry sources suggest investors were the main buyers of pre-construction condominiums in recent years before they became increasingly discouraged by reduced profitability. Consequently, condominium starts fell the most in the urban core, where investors have been most active.

Some buyers interested in condominium living were deterred by heightened economic uncertainty. Many that were still interested turned to the resale market that offered a vast supply of units that were lower priced, larger and potentially more suitable to their needs (on average). Notably, the number of condominiums available for sale on the resale market was at a record high in the second quarter of 2025.

Tepid pre-construction sales have reduced starts by causing fewer project launches and more cancellations. Many in the building community suggest construction costs must be reduced to ease condominium prices and improve project viability.

Prices for new condominiums that can better compete with prices on the resale market, along with improved macroeconomic conditions, could bring more prospective buyers off the sidelines. Also, attracting a wider buyer pool beyond investors may result in less volatility in supply when the appeal of investment condominium apartments fluctuates.

Rental apartment starts fared better

Relative to condominium apartments, rental apartment starts decreased by only 8% in the first half of 2025 remaining well above their 10-year average. Favourable financial viability and optimism among developers (PDF) regarding the region’s long-term rental fundamentals reduced the decline for rental apartments. Viability has been supported by government financing incentives and lower land prices:

• 84% of respondents to the 2025 Rental Housing Development Study (PDF) who primarily operated in the Greater Toronto Area, utilized CMHC financing tools; and
• land prices were down 30% from their 2021 peak in early 2025, according to Altus Group data

Seeing better prospects, some condominium developers switched to rental construction with 9 projects converted since 2024, according to Urbanation.

The downturn in condominium construction, which has supplied much of the region’s rental housing in recent decades, makes it vital to maintain a steady and growing stream of rental construction. To do so, it would be important to ensure consistent access to capital, mitigate cost volatility from municipal fees and tariffs and address regulatory hurdles in the management of housing supply.

Current trajectory points to deteriorating affordability

Weakness in Toronto’s new construction market isn’t expected to reverse over the short-term, with annual housing starts through 2027 expected to be well below what’s required to restore affordability to pre-pandemic levels by 2035. This threatens affordability and presents the prospect of less economic activity, outmigration, a higher incidence of homelessness and forgone tax revenue.

Housing starts rise significantly due to rental unit construction

Housing starts nearly doubled with most starts being rental apartments. New projects were added to an already elevated number of multi-units under construction this year. This surge in supply, combined with a slowdown in population growth from lower immigration targets means more supply for renters in the near and long term. In 2025, the high number of units under construction that will be completed will add to the housing stock, while the significant starts promise more supply in the future.

New home and condominium sales are slowing, reflecting weakened buyer confidence

Sales of new homes in Ottawa have been sluggish so far in 2025, particularly for condominiums. This mirrors trends in the resale market, where economic and trade uncertainty continue to weigh on buyer confidence. As a result, the number of new and active resale listings has risen compared to last year and is well above historical norms, leading to an increased housing supply on the resale market.

While overall activity is muted, sales of more affordable options, such as semi-detached and row houses, have been more resilient than single-detached homes.

Early 2025 Housing Starts in Halifax show slight decrease from previous year

Halifax’s single-detached housing market showed a small decrease in the first half of 2025 compared to the same period in 2024. While construction activity remained steady, there was a slight easing in momentum, as developers cautiously navigated geopolitical and economic uncertainty.

Multi-unit rental apartment construction remains elevated

Construction activity remains steady, driven by strong rental apartment demand and lower interest rates. Rental apartments under construction were at a record high – 10,000+ units in June 2025 – significantly above their 10-year average. Rapid population growth and the eroded affordability of homeownership continue to support rental demand and new rental construction in Halifax.

Despite its significant growth, rental construction still faces obstacles. Developers highlighted cases where obtaining the initial approval for the projects took longer than building the units, making permits a significant drag on housing supply.

There has also been a difference in how nimble developers have been in the face of prevailing economic uncertainty:

• smaller developers have been more likely to scale down and adapt
• larger developers rethinking large projects have had more challenges adapting

This highlights the differences in the needs and opportunities of different housing suppliers and the level of support they require.

Capacity constraints are limiting new housing supply

An important housing supply challenge is posed by Halifax’s ongoing construction boom. Capacity constraints like skilled trade labour shortages limit how much housing can be supplied in the CMA. Many projects are on hold because of inadequate labour supply. Since 2015, both housing starts and completions have grown by a compound annual growth rate of almost 7% and the necessary workforce has not kept pace.

Higher resale market supply as new listings rise

On the resale home market, supply has improved this year with a greater number of new listings than a year ago. This has kept the number of active listings high and reduced pressure on house prices. Notably, weaker buyer demand has contributed to this growth. However, this trend may reverse as buyer sentiment improves.