Canada’s Housing Landscape in 2025: Growth Amid Caution
As Canada stepped into 2025, it marked a significant milestone in its housing development journey. With a total of 259,028 housing starts, Canada not only outperformed its 2024 figures by 5.6% but also secured its spot as the fifth-highest annual total recorded. However, behind this seemingly robust number lies a more nuanced narrative, one that reflects both successes and emerging challenges in the Canadian housing market.
Record-Breaking Rental Construction
A notable trend in 2025 was the continued dominance of rental housing in urban areas. For the second consecutive year, rental construction accounted for just over half of all housing starts in Canada’s major urban centres. This growth underscores a shifting paradigm, where the demand for rental properties drives the housing market more than ever before. The Canada Mortgage and Housing Corporation (CMHC) revealed that housing starts in municipalities with populations of 10,000 or more rose by 6% year-over-year to 241,171 units. This surge was propelled largely by a record-breaking year for the construction of rental properties.
Regional Highlights and Disparities
Regional variations paint a diverse picture across Canada’s six largest census metropolitan areas. Collectively, these regions posted a 3.9% increase compared to 2024, primarily fueled by remarkable growth in cities like Calgary and Edmonton. Both cities showcased record annual starts, with a notable 58% increase in Montréal and a 12% rise in Ottawa-Gatineau further contributing to the upward trend. However, this growth narrative was tempered by declines in Toronto (-31%) and Vancouver (-3%), two of the country’s largest real estate markets, indicating varying local economic conditions and development challenges.
A Strong End to the Year
December 2025 closed on a high note for housing starts. The seasonally adjusted annual rate jumped by 11% month-over-month to 282,439 units. Notably, the actual starts in centres of 10,000 or more reached 20,716 units, marking the highest December total on record. Ontario played a pivotal role in this surge, contributing significantly with its highest monthly starts total of the year. Major cities such as Toronto, Montréal, and Vancouver all recorded year-over-year increases, primarily driven by multi-unit construction, which suggests a robust end to a challenging year.
Caution Amidst Growth
Despite these positive indicators, CMHC has issued a cautious outlook regarding the longer-term trends in the housing market. The six-month trend in housing starts, a metric that smooths out monthly fluctuations, revealed an almost flat trajectory in December with a slight decrease of 0.1% to 264,428 units. This decline, noticeable since September, raises questions about the sustainability of the growth seen earlier in the year. According to CMHC Chief Economist Mathieu Laberge, much of the momentum occurred in the first half of 2025. Economic uncertainty, coupled with the diminishing feasibility of large residential towers, appears to be nudging developers towards smaller-scale projects.
Challenges Ahead for 2026
As Canada enters 2026, the housing sector appears to be losing some of its earlier momentum. The CMHC has flagged concerns regarding slowing construction rates compounded by ongoing geopolitical and trade uncertainties. This suggests a more cautious approach will be necessary as developers and investors navigate a potentially volatile climate.
The upcoming Housing Market Outlook, set for release in February, is anticipated to provide clearer insights into whether the late-2025 slowdown is a transient anomaly or indicative of deeper issues within Canada’s housing supply pipeline. Stakeholders, including government bodies, developers, and potential homeowners, will be watching closely for guidance on the future trajectory of housing starts and the overall market health.
Conclusion
In summary, while Canada’s housing market displayed notable growth in 2025, this success is tempered by underlying challenges and uncertainties. The impressive numbers reveal a resilience in rental construction and regional variations but also highlight the need for cautious optimism. As the market adapts to new realities, stakeholders must remain vigilant and informed, positioning themselves strategically for whatever lies ahead in this dynamic landscape.
