Canada’s housing starts appear steady at first glance—but below that surface-level stability, there are growing imbalances at the provincial level.
The seasonally adjusted annual rate held flat at 279,510 units in May, down just 0.2 per cent from April according to the latest Canada Mortgage and Housing Corporation (CMHC) data. Housing starts on a year-to-date basis, meanwhile, are tracking 1 per cent ahead of last year.
A deeper dive reveals that a two-speed market is taking shape. Growth remains concentrated in the Prairies and Quebec, where demand for single-detached homes and purpose-built rentals continues to drive new supply. Saskatchewan (+206 per cent), Manitoba (+209 per cent) and Alberta (+39 per cent) have seen strong year-to-date gains. Unlike the micro-units crowding Toronto and Vancouver, these larger, more livable units leave markets less exposed to speculative buyers and better aligned with resident demand.
The picture is quite different in Ontario and British Columbia. Year-to-date housing starts are down 29 per cent in Ontario and 22 per cent in B.C. as condo activity stalls, according to the CHMC data.
Canada’s call for more housing supply was not meant to be answered by collapsing condominium demand. Toronto and Vancouver saw the sharpest slowdowns, where total condominium sales—including resale, new, and pre-construction—plunged 75 per cent in Toronto and 37 per cent in Vancouver since 2022.
Much of the condo supply in both cities was built for investors rather than residents, as smaller units are ill-suited for families. Now, as investors retreat, the market is undergoing a sharp correction.
Pre-construction inventory in Toronto also climbed to 58 months of supply—more than 14 times higher than 2022 levels, according to a recent CMHC report.
For many Canadians, the preferred path increasingly appears to be the rental market—at least for now—as prices slide and rents ease. National rents dipped 3.3 per cent in May, according to data from Rentals.ca and Urbanation; this marked eight consecutive months of annual declines.
This shift comes as broader economic conditions weaken. Unemployment climbed to 7 per cent in May—the highest since 2016, excluding the COVID-19 pandemic— and job seekers are taking longer to find work.
Trade tensions with the U.S., new tariffs and policy uncertainty have eroded business confidence while still-elevated mortgage rates, slower population growth and job losses are keeping both end-users and investors on the sidelines.
There are some early signs of stabilization on the resale side. National home sales edged up 3.6 per cent in May—the first monthly increase in six months—while price declines appear to be leveling off, according to the latest data from the Canadian Real Estate Association (CREA).
However, year-over-year, prices remain 3.5 per cent lower and sales 4.3 per cent below last year’s pace as both buyers and sellers remain cautious.
For developers, the sidelines remain the safest seat. In high-cost urban markets, pre-sales have slowed, financing has become harder to secure and project cancellations are on the rise.
Even as some provinces continue to build, Canada’s overall housing outlook remains highly sensitive to the broader economic pressures expected to persist through the second half of 2025.
Read RSM Canada’s latest analysis in The Real Economy Canada and subscribe for more updates.
