2/10/2026
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Posted in New Developments by Vanguard Realty | Back to Main Blog Page
Canada’s homebuilding engine is expected to lose momentum through 2028 as developers grapple with higher costs, weaker demand and rising inventories of unsold units – especially in the condominium segment, according to Canada Mortgage and Housing Corporation’s (CMHC) 2026 Housing Market Outlook.
The agency projected that national housing starts would fall below their 10‑year average even as rental construction stays elevated.
The outlook sets 2026 real GDP growth at just 0.7%, making it one of the weakest non‑recession years in recent decades, with trade tensions, slower population growth and softer labour markets all weighing on household spending and housing demand.
CMHC’s baseline called for total starts of 247,000 units in 2026 and 223,000 in 2027, down from an estimated 259,000 in 2025, while MLS sales were forecast to remain below historical norms even as prices recover only modestly from a 2025 dip.
“We expect Canada’s economy to grow slowly in 2026, as many households and businesses remain cautious because of geopolitical and trade uncertainty. This caution is leading many households to delay buying homes and making builders more hesitant to start new projects,” said Kevin Hughes, CMHC deputy chief economist.
“These pressures will affect housing markets differently across the country. Stronger local conditions may help support housing market activity in Montreal and Calgary for example, while weaker conditions could further slow housing demand and construction in Toronto and Vancouver.”
Regional picture: Condo drag, rentals rising
n Toronto and Vancouver, CMHC projected that condominium starts would stay under pressure as presales weaken and construction costs stay high, even as recent waves of purpose‑built rental completions lift vacancy rates and cool rent growth.
By contrast, Montreal’s rental‑driven boom in 2025 is expected to leave starts elevated into 2026, while Calgary and Edmonton were forecast to step down from record building levels as new rental supply push vacancies higher.
National implications for the housing shortfall
CMHC already warned that Canada needs roughly 3.5 million additional homes by 2030 to restore affordability – a target its own economists acknowledged is increasingly difficult as construction costs, labour shortages and financing constraints bite into new supply.
Earlier CMHC projections already flagged a slowdown in starts tied to weaker condo demand in Ontario and British Columbia, with TD and other economists warning that 2025’s lift in housing starts remained “far from the target” needed to close the supply gap.
The new outlook’s call for further declines through 2028 underlines that even as rental markets move closer to balance and give renters more breathing room, Canada’s long‑running structural shortage of ownership and rental housing is on track to persist well into the next decade.
Source: Canadian Mortgage Professional
Housing Affordability, Housing Correction Canada, Housing Market Forecast, Housing Starts, Housing Supply
