Combined housing starts remain stable in Canada’s 7 key markets, with significant regional differences
The combined housing starts in Canada’s 7 major CMAs held steady in the first half of 2025, matching near-record levels from the same period in 2024. However, this overall strength masks significant regional variations and emerging trends.
Housing starts rose across Calgary, Edmonton, Montréal and Ottawa, led by rental apartment construction. Calgary and Edmonton also saw more ground-oriented starts, supported by comparatively lower ownership costs and better affordability.
When adjusting for population, Calgary stood out with the highest number of housing starts per 10,000 residents – almost a record high. Montréal also saw an improvement, although its population-adjusted starts continued to trail most other key markets (Figure 1).
By contrast Halifax, Toronto and Vancouver saw declines. Toronto saw the steepest drop across all housing types as both end-user and investor demand weakened, triggering a broad-based construction slowdown. On a per capita basis, Toronto’s homebuilding activity fell to its lowest point since 1996, ranking last among the 7 CMAs.
Modest rise in ground-oriented construction led by more affordable markets
Across the 7 CMAs, ground-oriented starts rose modestly by about 5% in the first half of 2025 compared to the same period in 2024. Lower mortgage rates unlocked some pent-up demand but remained high relative to levels in 2020-2021, keeping affordability tight and recovery modest.
Activity improved noticeably in more affordable markets like Calgary, Edmonton and Montréal. However, in pricier centres, the picture was different. Ground-oriented construction held steady in Ottawa and Vancouver but declined year-over-year in Toronto and Halifax.
The limited rebound in higher-priced markets like Toronto and Vancouver also reflects weaker move-up activity. Many sellers struggled to sell their starter homes due to fewer first-time buyers entering the market. Others remained cautious amid economic uncertainty and higher ownership costs when trading up.
Halifax’s ground-oriented construction faced additional challenges, including delays and added costs, which often made projects unfeasible.
Rental construction dominates apartment starts as condominium activity slows
Apartment construction (includes both condominium and rental) remained the dominant form of new housing, accounting for 70% of starts. This is a slight dip from the same period in 2024. Overall, apartment starts across the 7 CMAs edged down 2% in the first half of 2025, as decreases in the condominium segment outweighed gains in rental construction.
Purpose-built rentals make up a growing share of apartment starts
Purpose-built rental apartment starts rose significantly through mid-2025. However, Toronto and Vancouver diverged from this trend, posting declines of around 10%. Despite these drops, rental construction in both CMAs remained above their 10-year averages. Purpose-built rentals now account for a growing share of total apartment construction (Figure 2).
This growth in rental starts in the first half of 2025 was largely driven by record immigration inflows and strong rent growth expectations during the planning stages, even though immigration has recently slowed.
Interestingly, some developers who traditionally focused on condominiums have shifted toward purpose-built rentals. They are attracted by the lack of presale requirements, which has become a growing challenge in the condominium market.
Government support has also been crucial in enabling these rental projects. CMHC’s construction financing programs backed an estimated 88% of new purpose-built rental starts across Canada in 2024, making many of these developments feasible.
Investor pullback slows condominium construction
Mid-2025 data show declines in condominium apartment starts across all markets except Edmonton and Ottawa. The decline was particularly pronounced in Toronto, where a pullback in investor demand during the first half of 2025 reduced project feasibility, leading to cancellations, delays and a sharp drop in starts.
This pullback follows a surge in presales in 2021–2022, driven by near-record-low interest rates and strong rental demand that attracted investors to Toronto’s condominium market. That surge triggered a wave of condominium completions over the following years. These newly finished units increased resale supply and reduced the immediate need for new homes. As a result, pre-construction sales slowed, limiting new condominium apartment starts in the first half of 2025.
Differences in project size further shaped regional variations in condominium apartment starts. In Calgary and Edmonton, apartment projects were typically smaller and often included stacked townhomes (Figure 3). This made it easier to meet presale thresholds and secure financing amid softening investor demand. In contrast, larger projects in Toronto struggled to hit presale targets, delaying many developments. Projects that started in 2025 generally had fewer units than in previous years.
Purpose-built rental construction is expected to continue outperforming condominiums. This is supported by projected growth in rental demand. However, builders’ sentiment in the rental segment weakened in 2025. In CMHC’s Canadian Rental Construction Survey, developers cited rising financing challenges and tariffs on materials squeezing profit margins. To ensure financial viability, more developers are choosing longer-term strategies, like developing and holding on to their rental assets and seeking longer amortization periods.
Recent years’ housing start highs boost housing stock
Unlike housing starts, which signal future supply, completions represent actual additions to the housing stock – homes people occupy. Completions dipped slightly across the 7 CMAs in the first 6 months of 2025 but stayed near record highs.
As noted in our recent 2025 Mid-Year Rental Market Update, strong growth in purpose-built rental and condominium apartment completions has boosted rental supply in large CMAs. Combined with demand headwinds, this has led to softer market conditions, with landlords reporting longer lease-up times and declining asking rents.
In Toronto and Vancouver, many recent completions were investor-owned condominium apartments, leading to a notable increase in resale supply. This contributed to softer market conditions and declining prices.
However, despite signs of adequate supply in the short term, long-standing affordability challenges persist due to structural undersupply. Lasting improvement will require sustained growth in construction. According to the report Canada’s Housing Supply Shortages: Moving to a New Framework, starts must rise by about 30% in Vancouver and 70% in Toronto over the next decade to restore pre-pandemic affordability.
With starts remaining stable, what’s next for Canada’s key markets?
Despite a steady first half, combined housing starts for the 7 key markets in 2025 are expected to fall below 2024 levels. This is consistent with what we’re hearing from the industry. In the second quarter of 2025, the Canadian Home Builders’ Housing Market Index – which reflects builder expectations for pre-construction sales over the next 6 months – remained near historic lows. Confidence was especially weak in Ontario and British Columbia, and declined even in the Prairies, where market conditions are still robust.
Builders continue to cite persistent supply-side pressures that are eroding project viability and slowing new development. These include rising construction costs, high development charges, tariff-related disruptions and limited municipal infrastructure. These challenges make it harder to secure financing and are delaying new project launches.
We expect only a slow and marginal rebound for the 7 key markets combined over the next 2 years. This rebound will take shape mostly in 2027, according to the Summer Update: 2025 Housing Market Outlook. The timing and scale of recovery will vary widely across the key markets:
- Toronto remains the hardest hit. As of mid-2025, it’s on track for its lowest level of housing starts in 30 years. Pre-construction sales continue to decline by double digits, prompting developers to delay launches and scale back land acquisitions. Only a marginal recovery is expected in 2026 and 2027, keeping construction activity well below historical levels.
- Vancouver is also expected to see a further decline in total starts in 2025. However, a gradual recovery by 2027 should bring activity closer to its 10-year average.
- Montréal is expected to outperform – with a recovery already underway in 2025 – led by strong purpose-built rental construction. While further growth isn’t anticipated, current momentum is expected to be sustained.
- Edmonton and Calgary are on track for record-high starts in 2025 and remain the most resilient key markets. However, some moderation is anticipated in 2026 as activity levels normalize.
Short-term construction slowdowns may pose lasting risks
The decline in construction observed in some markets could persist beyond the short term and lead to long-term challenges. In particular, the drop in ground-oriented construction in high-cost markets may signal a lasting decline in homeownership rates and a prolonged slowdown in housing starts.
If rental construction fails to keep pace, rental affordability could worsen. This risk is likely mitigated in the short term, as purpose-built rental construction in 2025 is expected to surpass earlier forecasts in several CMAs, with many projects continuing to break ground.
The slowdown in housing starts could also have lasting effects on the construction workforce and the broader economy. Signs of softening are already visible in some regions, and prolonged weakness may lead to deeper job losses and workers shifting to other sectors. This situation would make it harder to ramp up activity when demand recovers. Additionally, project cancellations and slower land acquisitions could limit developers’ ability to quickly scale up once conditions improve.
