CMHC Forecasts Multiyear Slump for Canadian Homebuilding

This anticipated slump is attributed to a confluence of factors including escalating construction costs, softening demand, and record-high levels of unsold housing inventory. Data from Canada's seven largest urban markets in 2025 revealed unprecedented unsold units, with the condominium markets in Toronto and Vancouver experiencing a near collapse; Toronto condo sales in 2025 hit a four-decade low.

The glut of unsold properties restricts developer access to credit, leading to project delays or cancellations, thereby slowing the future housing supply pipeline. This comes as construction firm confidence is at record lows, existing home sales are down nearly 20% year-over-year, and prices have fallen 19% from their February 2022 peak, predating aggressive Bank of Canada rate hikes.

While 2025 saw a 6% rise in housing starts to 259,000 units, CMHC notes these reflect prior, more accommodative conditions. Despite an expected rebound in demand, the current slowdown risks creating a future housing shortage.

National Bank Financial suggests federal intervention may be necessary to stimulate building, balancing affordability gains from immigration caps with potential construction downturns.