Canada’s homebuilders are bracing for continued challenges as higher construction costs, softer demand, and rising inventories are expected to weigh on the market through 2028, especially in the condominium sector. According to findings from the latest Housing Market Outlook (HMO), released by Canada Mortgage and Housing Corporation (CMHC), geopolitical and trade uncertainty, combined with slower population growth, will further dampen housing demand across several regions.
For the rental housing sector, elevated construction will continue to add new supply, but this momentum is anticipated to ease over the forecast horizon. Regional differences, however, remain stark: Ontario and British Columbia are set to see construction and sales activity fall below their 10‑year averages, while the Prairies and Quebec are expected to outperform long‑term trends.
“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.”
Major market highlights
Toronto: New housing starts are projected to remain low in 2026 as condominium construction continues to slow. Strong rental starts will provide some offset, but rising vacancy rates and softer rent growth will challenge future rental development. Sales activity is expected to pick up but remain below long‑term averages.
Vancouver: Housing starts are forecast to continue declining as high construction costs and weakening demand (particularly for condominiums) weigh on new projects. With a wave of rental units completed over the past four years entering the market, vacancy rates will stay elevated, putting downward pressure on rent growth and future rental construction.
Montreal: After record growth in 2025, housing starts are expected to remain high in 2026. Rental construction will continue to dominate, and the strong influx of new units will push the vacancy rate higher.
Calgary: Following several years of rapid expansion, new home construction is expected to moderate. As more rental units come online, vacancy rates will rise and rent growth will slow.
Edmonton: Housing starts will decline moderately as high inventories and slower population growth bring the market closer to balance. Additional rental supply will lift vacancy rates and temper rent increases.
Ottawa: After reaching a historic peak in 2025, housing starts will slow in 2026. The rental market is expected to soften as fewer international students and workers move to the region.
Halifax: Housing starts will trend down from recent record highs as the city transitions from rapid, population‑driven growth to more moderate conditions amid slower migration and easing construction activity. Despite this shift, Halifax’s strong labour market is expected to support modest gains in home sales and prices.
CMHC’s 2026 Housing Market Outlook also includes updated forecasts for Victoria, Regina, Saskatoon, Winnipeg, Hamilton, Kitchener–Cambridge–Waterloo, Windsor, St. Catharines–Niagara, London, Gatineau, and Québec. For the full report, visit the CMHC website.
