CMHC Predicts Continued Decline in National Housing Starts
The latest insights from the Canada Mortgage and Housing Corporation (CMHC) reveal a cautionary outlook for the construction industry over the next few years. With total housing starts projected to decline to 247,000 units in 2026 and further down to 223,000 in 2027, the anticipated decrease from the estimated 259,000 starts in 2025 signals a significant shift. This decline emphasizes the growing hesitance among builders in response to economic uncertainties, particularly those stemming from geopolitical tensions and trade fluctuations, as articulated by Kevin Hughes, CMHC’s deputy chief economist.
The broader economic landscape appears subdued, affecting both household purchasing behavior and builder confidence. The cautious sentiment among consumers and businesses is expected to dampen the housing market, with many potential buyers delaying decisions to purchase homes. Consequently, this has created a ripple effect where builders are also more reticent to initiate new projects, which could hinder the sector’s growth and recovery.
Regionally, the housing markets are anticipated to experience disparate impacts. Particularly, Toronto and Vancouver are expected to face challenges as condominium starts remain under pressure due to weakened presales and high construction costs. The rising completion rates of purpose-built rentals are likely to increase vacancy rates in these metropolitan areas, thereby cooling rent growth. This could lead to a more competitive rental market, potentially benefiting renters but constraining developers focused on condominiums.
Conversely, markets like Montreal are projected to maintain elevated housing starts driven by a robust rental market, stemming from significant activity in 2025. The momentum in Montreal presents opportunities for growth, suggesting a favorable environment for construction professionals in that region. Meanwhile, Alberta cities like Calgary and Edmonton are predicted to see a decline from previous record levels in new rental supply, which could lead to higher vacancy rates as the market adjusts.
The implications of these projections are multifaceted. The anticipated slowdown in housing starts could pose challenges for construction companies, impacting project timelines and financial stability. Moreover, regional differences highlight the importance of localized strategies for builders and developers, encouraging them to adapt to prevailing market conditions accordingly.
In conclusion, the CMHC’s projections underline a pivotal moment for the Canadian construction industry. While certain regions like Montreal may offer growth opportunities, the overall national sentiment calls for caution. Stakeholders must navigate these dynamics thoughtfully to position themselves favorably in a shifting landscape characterized by economic uncertainty and regional variances in housing demand.
📋 Article Summary
- CMHC forecasts total housing starts to decline to 247,000 units in 2026 and 223,000 in 2027, from an estimated 259,000 in 2025, with sales below historical norms despite modest price recovery.
- Economic growth in Canada is expected to be slow in 2026, influenced by household and business caution amid geopolitical and trade uncertainties, impacting home-buying and new construction.
- Housing market conditions will vary regionally, with stronger activity anticipated in Montreal and Calgary, while Toronto and Vancouver face weaker demand and construction challenges.
- Condominium starts in Toronto and Vancouver are expected to be pressured due to weaker presales and high construction costs, whereas Montreal’s rental-driven boom will keep starts elevated.
🏗️ Impact for Construction Professionals
The CMHC’s projections indicate a cautious landscape for construction in Canada, with total housing starts expected to decline. As such, construction professionals should strategically pivot to adapt to these changing dynamics.
Opportunities and Challenges: Focus on regions with stronger conditions, like Montreal and Calgary, while being cautious in Toronto and Vancouver. Consider diversifying into rental projects, as demand for purpose-built rentals is rising despite pressure on condos.
Actionable Insights: Stay informed about local market conditions to identify where to shift resources effectively. Enhance relationships with potential renters, landlords, and local governments to navigate project financing and approvals more smoothly. Conduct market analyses to forecast trends and align project timelines accordingly.
Impact on Operations: Prepare for fluctuating construction demand by maintaining flexible workforce arrangements. Proactively manage costs, particularly in high-expense areas like materials, to stay competitive. Incorporate risk assessments into strategic planning to address economic uncertainties, helping ensure sustainable operations through slow periods. Prioritizing adaptability in business strategy will position firms favorably in this evolving market landscape.
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