The struggling new home market across the Greater Toronto Area (GTA) and Greater Golden Horseshoe (GGH) is poised to worsen before conditions improve, according to a new comprehensive report commissioned by the Residential Construction Council of Ontario (RESCON).

The analysis, conducted by the University of Ottawa’s Missing Middle Initiative, reveals that housing starts in the first nine months of 2025 are down substantially compared with the same period over the previous three years, while residential construction job losses continue to mount.

“We are staring into the abyss,” said RESCON president Richard Lyall. “The new home market has tanked. It is a particularly dark time for those who work in residential construction. There have been significant job losses across the board. Projects are being shelved, and this will have a significant trickle-down effect on Ontario’s economy. We must act quickly to stem the bleeding.”

The report draws on data from the Canada Mortgage and Housing Corporation and Altus Group, assessing 34 municipalities across nine metro areas in the GTA and GGH. It is RESCON’s second analysis this year; the first, released in September, covered the first six months of 2025.

Key findings from the new report include:

• Housing starts are down 34 per cent in the first nine months of 2025 compared with 2021–2024;
• Condo apartment starts plunged 51 per cent over the same period; and
• Purpose-built rental starts rose 42 per cent, offering a rare bright spot in the market.

The research also graded municipalities on housing starts and sales. Seventeen of the 34 municipalities received an F, nine a D, and the remaining eight scored a C or higher. Average grades have improved slightly from the earlier report, but researchers warn the trend could deteriorate in future analyses.

The decline in construction activity is having a noticeable impact on employment. The report estimates that lower housing starts in the first nine months of 2025 translate into 35,377 fewer person-years of employment compared with the same period in the previous three years.

“The person-years of employment in the industry are down which shows the effect that the lack of housing starts and sales is having on the industry and the economy,” said Mike Moffatt, an economist and founder of the Missing Middle Initiative. “The negative trend in employment has continued and there is significantly less work in the residential construction sector.”

The report comes at a critical time. Both the federal and Ontario governments have pledged to increase housing starts significantly, but experts say these targets may be out of reach.

High taxes are a major factor. Fees, levies, and taxes account for roughly 36 per cent of a new home’s cost, meaning a $1-million home includes about $360,000 in taxes. RESCON has called on both levels of government to eliminate sales taxes on all new homes, beyond the exemptions already offered to first-time buyers.

“This report is an eye-opener, as it notes we are trending in the wrong direction and the situation could get even worse,” added Lyall. “Builders need to be able to build homes that people can afford. Steps must be taken to get the industry back on track. Our economy depends on it.”