00:00:00:00

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[Visual: Joelle Hamilton and Kevin Hughes sit in armchairs in a recording studio with microphones on stands positioned in front of them. Joelle wears a tan cardigan with black pants and boots. Kevin wears a black blazer and black button-down shirt with dark grey jeans and lace-up boots. The camera angles shift between close-ups of each of them and a profile of both.]

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

What are we forecasting for housing starts this year?                                                                                                                

00:00:03:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

We're expecting a relatively stable market in terms of construction.

00:00:09:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

What does this mean for housing demand across Canada?

00:00:12:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

We're going to see a cooling-off of demand because of that uncertainty, so people will postpone purchases.

00:00:18:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

As you mentioned, we expect weaker demand and supply growth in 2026 through to 2028. What does this mean for house prices?

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00:00:30:00

[Speaker: Female voiceover]

You're listening to In-House - Canada's Housing Podcast, where we share the latest on Canada's housing market.

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00:00:46:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

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Hello, everyone, and welcome back to In-House. I'm your host, Joelle Hamilton. Today, we're talking about CMHC's 2026 Housing Market Outlook. It's our latest forecast on the economy, housing demand, home prices, rental markets and construction across Canada. Joining me today is Kevin Hughes, one of CMHC's Deputy Chief Economists. Welcome back to the studio, Kevin.

00:01:07

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

Thank you very much.

00:01:08:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

So, I'm looking very forward to sitting down with you and hearing about what CMHC is forecasting for 2026 and beyond, so 2027 and 2028. This is my very favourite report that CMHC puts out, so that's why I'm particularly excited to have you in the studio today.

00:01:26:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

Glad to hear it.

00:01:27:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

All right. So, 2026 is already shaping up to be a difficult year, economically. Can you walk us through the areas of weakness and tell us how they're going to shape the economy moving forward?

00:01:45:00

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[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

Of course, so about a year ago when we were talking, I mentioned that we didn't have a reference scenario, because the economic landscape was so uncertain that we instead just put forth 3 scenarios: slow, medium and higher growth for the economy scenarios.

We see a bit more clear 12 months later. But what we do see is still quite a looming uncertainty that is definitely holding back the private sector, business investment, hiring. Let's say that cloud is also hanging over consumers in spending and, of course, in the purchases of homes, as well. And it's also probably holding back household formation.

So, we know, for example, that we have less immigration this year. But even for people, for Canadians who are not immigrants, those who would normally be forming households, we feel that there are probably less of those being formed because of the uncertainty. So, this is really having a big impact on the economy.

On the more, let's say, the brighter side, we do have a government sector, especially the federal government, that has definitely taken note of this situation and has a very, I'd say, a robust plan. Government spending will be a source of growth. We're looking at, for 2026, just below 1%, so 0.7%, to be precise. It's around 1%. It's not a recession in this baseline scenario, but it is slower growth. So, it's going to be definitely here for the coming year. We should hopefully see some recovery in '27.

But we do have a big milestone coming up in the summer, and that is when the 3 countries that have agreed on the CUSMA agreement decide if they want to continue. And I think a lot of people are waiting to see how that's going to, what the outcome of that is going to be.

00:03:50:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

So, given this economic backdrop, Kevin, what does this mean for housing demand across Canada?

00:03:56:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

As we know, housing is demand and supply. On the demand side, obviously, you're going to see a cooling-off of demand because of that uncertainty. People will postpone purchases.

There's also the affordability that is factoring in, of course, and carrying costs. On the supply side, you have the construction costs as well, inventories that are high. Generally speaking, we will see that, definitely. And I think we can say that even in 2025, that has occurred, as well. Of course, the economy, especially the external side, international trade, has an impact on housing, but in a more delayed way, if you wish.

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But it certainly does and will probably continue for the near future.

00:04:44:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

So, now, on the supply side and construction. So, construction has held up more than we may have expected, but that's definitely changing based on the HMO report that I read before having you in the studio. We also know that housing starts finished higher in 2025, with roughly 260,000 new units that were started nationally, which is the third highest annual total on record, which is up 5.6% compared to 2024. That said, the recent momentum points to a softer outlook heading into 2026. What are we forecasting for housing starts this year?

00:05:27:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

So, on a national scale, we're forecasting a subdued level of housing starts. And I think going back to, you were talking about the strength in 2025, you always have to remember that housing start is a lagging indicator of business decisions that were made, sometimes, years before. So, the strength that we saw in 2025, and indeed there was strength, it was really a reflection of that past period when interest rates were coming down, companies were putting forth their projects and starting the actual starting. So, that phase, we believe, is more or less over, and we're entering a period where construction will be definitely lower. Some regions more than others. Ontario, notably, will be weak. In Quebec, Prairies, we'll see some strength there, because we're dealing with different types of housing. We're not dealing with mega, big, big projects. And there's also a more affordable situation in those provinces, and demographics are helping out as well. So, that's one thing, and we mentioned before inventories and there is a lot of inventory, especially in the condo market, notably in Toronto. So, it's not surprising that we will see this, but as is always the case, there's a regional picture that you have to take into consideration.

00:06:51:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

As you mentioned, we expect weaker demand and supply growth in 2026 through to 2028. What does this mean for house prices?

00:07:01:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

Well, this is usually the resulting factor of these forces that come into play. So, for Canada, we believe prices will be pretty stable. And then, from a regional perspective, Ontario definitely will see a certain decrease in prices. And possibly B.C. may see a bit of increase as well due to the condo mix in the global—in the total, rather. And that probably will make prices go up a little bit, but it's a compositional effect. And then Quebec and the Prairies, as I mentioned before, probably we'll see some price growth in '26.

00:07:42:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

Now moving on, you just mentioned condominiums, but according to CMHC's 2025 Housing Supply Report, which was released last September, purpose-built rental construction surged in 2025, and it was bolstered by government support, like the Housing Accelerator Fund, and a shift among developers towards the rental market. Is that still going to be the case this year?

00:08:08:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

Well, I think that rental will still be an important part of that mix, but we saw also in last year's Rental Market Report or Rental Market Survey that there is easing in the rental market, so that will probably take a bit of momentum out of that market for promoters to want to build more of that. And of course, we have that on the backdrop of less immigration coming in. And as I mentioned before, there is probably a lesser degree of household formation. So, these are young people living with their families. They may not have a job or they may have a job, but rents are still relatively expensive and sometimes very expensive. So, that will probably take some impetus out of the momentum for starts in the rental side. Condo, yeah, it depends on the market. Of course, Toronto is a particular case, so we expect that that will be a depressed market going into ’26, possibly ’27, as well. But in other areas, where they build not-as-big units, that will be a different case. So, rental will still be the more affordable market, but for many Canadians, it's still very high.

00:09:26:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

So, while we're talking about the rental market, what's in store for the rental market this year?

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[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

Well, on the demand side, we've had lesser levels of immigration, and that's a component of demand for rental dwelling. And as I mentioned before, quite probably a lesser degree of household formation, younger potential renters, so they're staying with their families instead of moving into an apartment. So, demand probably, you know, not as strong as it was in previous periods. We have a number, in many regions, a number of projects that will be part of our Rental Market Survey again in '26. So, we expect the market to still be a bit less tight than it was in previous years. And I say “a bit” because when we say 3%, a lot of people think that that's kind of a balanced market. We're hovering around that level for many areas, but in other areas of the country it's still relatively tight, and even though rents have not increased as much, it is especially for first-time rental dwellers, it is still quite an unaffordable market.

00:10:39:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

So, now we've talked about the condo market, apartments, rental market. I'd like to shift to talk about ground-oriented homes. And by “ground-oriented homes,” I mean townhouses and detached homes. What are we forecasting in terms of ground-oriented homes? Are there going to be more, less, stable?

00:11:00:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

Well, ground-oriented homes, so single-detached, as you mentioned, townhouses, they're quite in a minority share when you take total construction in Canada. So, it is more and more the forgotten market segment, but still for many Canadians and for many regions where there's less densification and it's a bit more affordable, it is definitely a housing reality. So, we're expecting a relatively stable market, in terms of construction. In some areas, perhaps in the Prairies, perhaps in Quebec as well, we may see some continued growth, but it depends on whether you're not talking about necessarily the Montréal region because it's mostly all now multi-unit that is being built. So, I'm not going to say it's a niche market, but it is certainly not the main market. But for many people, it is an alternative for going into multi, if they're going from a 2-storey to a bungalow, for example. That can be a solution that many people would choose as they age. So, it's not disappearing, by any stretch of the imagination, but it's not going to be a highly growing sector, either.

00:12:12:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

We've talked about housing demand, new construction-slash-supply, the rental market. What are the biggest risks to this scenario that you mentioned and kind of walked us through this year?

00:12:25:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

The biggest risk that we see, which is that milestone that I talked about earlier on, which is in July, when we're going to get an indication, or probably more than an indication, we'll probably get some kind of an answer, we hope, as to the CUSMA agreement. Are we going to continue with the same environment for international trade? If that stabilizes, and we continue with that agreement, I think that there will be a lot of players in the economy will be definitely reassured, and that should be a sign that confidence will come back. Should it not, and that's when you're talking about risks, and should that break down or should that be postponed, that's just going to delay everything even more, perhaps. And we haven't talked about inflation and we're not forecasting a big spike in inflation, but should trade conditions deteriorate, it's not in our baseline scenario, but it's something that we always have in the back of our minds. So, that agreement breaking down and those relations breaking down further is the biggest risk. The other area of concern is, we talked about government being a big player here in economic growth. The projects that the government is embarked on are big projects, big spending projects. Those could be longer to deploy than announced. Should that drag on, money is there but it's not being spent. That would also be a drag to the economic growth.

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So, those are the 2, let's say, things that we're keeping our eye on.

00:14:16:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

So, you mentioned that July, kind of, milestone. Does that mean that we'll get you back in the studio this summer to give us a housing market update?

00:14:24:00

[Speaker: Kevin Hughes, Deputy Chief Economist — CMHC]

It does. We will be doing again this year a summer update. We chose to do 2 forecasts a year before this environment all started. And so we're happy we made that decision, because now it's all the more relevant to do that. And we'll certainly be pleased to be back in the summer.

00:14:44:00

[Speaker: Joelle Hamilton, Communications & Marketing — CMHC]

Well, let's pencil it in before we start scheduling our vacations.

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So, that brings a wrap and an end to our conversation today, Kevin. Thank you so much for walking us through what CMHC is forecasting in 2026 and beyond, and thank you to our listeners for joining us In-House.

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00:15:04:00

[Speaker: Female voiceover]

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Reach out, let us know what you think. Thanks for listening and see you next time.

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