Canada housing starts soar to a three-year high

Canadian housing starts surged in July, hitting their fastest pace since September 2022 as multi-unit construction in Vancouver and Montreal ramped up.

Canada Mortgage and Housing Corporation (CMHC) said on Monday that construction jumped to a seasonally adjusted annualized pace of 294,100 units last month, up 3.7% from June and much higher than most analysts had predicted.

In centres with a population of 10,000 or above, actual housing starts increased by 4%, with construction beginning on 23,464 units, while the year-to-date total has increased by the same percentage compared with the first seven months of 2024.

In Montreal, actual housing starts spiked by a huge 212%, thanks mainly to a big increase in multi-unit starts, but Toronto saw an overall slump of 69% compared with the same time last year as multi-unit and single-detached starts fell.

Canada continues to face an acute housing crisis, with prime minister Mark Carney’s government looking to push ahead with plans to turbocharge the construction of affordable homes in the coming years.

But CMHC’s deputy chief economist Tania Bourassa-Ochoa sounded a cautiously positive tone on recent construction trends. “Through the first seven months of the year, actual housing starts have remained above 2024 levels, primarily driven by increased multi-unit starts in the Prairie provinces and Quebec,” she wrote.

“These persistently elevated national results are reflective of investment decisions made months or even years ago, highlighting the influence of previous market conditions and builder sentiment on current construction trends.”

TD economist Rishi Sondhi described the latest figures as indicating a “hearty trend” in home construction, spurred by a robust mental market.

But it remains to be seen whether homebuilding will continue at its current pace. “Building permits suggest that starts could remain near these sturdy levels in the near-term,” Sondhi suggested in his analysis of the CMHC report. “However, we anticipate some cooling taking place in 2026.

“Population growth is slowing and asking rents are dropping in several jurisdictions. Meanwhile, building activity in the ownership market is likely to remain subdued, weighed on by past declines in pre-construction home sales.”

CMP

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