Canada’s homebuilding numbers looked healthier in 2025, with housing starts up 5.6% from 2024 to 259,028 units, the fifth‑highest annual total on record.
Canada Mortgage and Housing Corporation (CMHC) said on Friday that actual starts in centres with populations of 10,000 or more climbed 6% to 241,171, powered by a second straight year of record rental construction that made up just over half of urban starts.
Beneath those headline gains, though, the picture for new supply grew more fragile. Canada’s six largest Census Metropolitan Areas (CMAs) posted a combined 3.9% annual increase, but record activity in Calgary, Edmonton, Montréal and Ottawa–Gatineau merely offset sharp drops in Toronto (down 31%) and Vancouver (down 3%).
December’s seasonally adjusted annualized rate rose 11% from November to 282,439 units, yet the six‑month trend was essentially flat at 264,428.
Housing momentum shifted toward rentals
“While housing starts in 2025 finished ahead of 2024 and inched up in December, most of the momentum in housing construction occurred in the Spring and Summer. Since September, the trend in housing starts has consistently decreased. In 2025, economic uncertainty and the diminished viability of large residential towers encouraged a shift towards smaller-scale projects,” said Mathieu Laberge, chief economist and SVP, housing insights at CMHC.
“As such, housing starts are beginning this year from a weaker position and market intelligence suggests slowing momentum for residential construction. These trends, along with geopolitical and trade uncertainty, remain top of mind as we expect to release an updated Housing Market Outlook in February.”
That shift toward multi‑unit rentals has already been evident through much of last year. In a mid‑2025 update, CMHC deputy chief economist Tania Bourassa‑Ochoa noted that “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.”
A long way from affordability targets
Despite 2025’s modest rebound, the level of construction still fell well short of what CMHC said was needed to restore affordability.
The agency estimated that millions of new homes are required to restore housing affordability in Canada by 2030, with modelling pointing to a shortfall of around 30,000 starts in 2023 alone.
Subsequent analysis suggested between 430,000 and 480,000 new housing units per year would be required across ownership and rental markets by 2035 – roughly double recent building volumes – to close the supply gap.
Meanwhile, Danny Di Meo, president and founder of Toronto-based builder Caliber Homes, told Canadian Mortgage Professional there remained a disconnect in the current market between demand for homes and the feasibility of delivering that supply.
“There’s still real demand for housing but high interest rates, construction financing constraints, and cost pressures have made many projects – especially high-density ones – difficult to launch. We’ve seen a lot of projects across the GTA [Greater Toronto Area] go on hold for that reason,” he said.
“If municipalities can speed up site plan reviews, align permitting with infrastructure servicing, and reduce some of the red tape in the early stages, that would make a big impact.”
Moreover, sluggish housing starts and delayed projects threaten to drag down the economy, Fraser Institute previously warned. Canadian Home Builders’ Association (CHBA) chief executive officer Kevin Lee also said that Canada’s homebuilding crisis may already be even worse than it seems with housing starts essentially skewed by construction of purpose-built rental accommodation.
CMP
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