Canada’s major rental markets are showing early signs of easing as new supply comes online and demand growth slows, according to a new report from the Canada Mortgage and Housing Corporation (CMHC). The shift is being driven primarily by an increase in higher‑priced rental units, which are taking longer to lease—a dynamic that is creating some relief at the upper end of the market while affordability pressures persist for lower‑priced rentals.
The report examines rental conditions across seven major rental markets and finds that asking rents have fallen in Toronto, Vancouver, Calgary and Ottawa, while remaining relatively stable in Montréal, Edmonton and Halifax. Although renters seeking new leases may find more choice in some cities, CMHC notes that improvements are uneven: vacancies are rising mainly in newer, more expensive units, while lower‑rent segments continue to face tight conditions and limited tenant mobility.
Despite slower population growth, CMHC expects rental demand to remain elevated, driven by younger adults who are more likely to rent.
“Recent supply growth is improving choice for renters in some segments of the rental market, particularly among newer, more expensive units,” said Tania Bourassa‑Ochoa, Deputy Chief Economist at CMHC. “However, persistently tight conditions in lower segments of the market highlight that affordability challenges remain and will take time to address.”
New supply driving competition
Housing providers in Canada’s major rental markets point to increased competition from new purpose-built rental housing supply as a primary reason asking rents have declined. In Toronto and Vancouver, the surge of newly completed condominiums entering the rental pool has also intensified competition, causing supply to outpace demand for higher-end units. While this competition is currently significant, CMHC says it expects it to diminish in the coming years as condo completions decline sharply.
In the meantime, landlords are increasingly offering incentives alongside reduced asking rents. Market intelligence indicates these incentives have grown more generous over the past six months, in some cases reaching several months of free rent. Other common offers include discounted parking, gift cards and move‑in credits.
Rents paid on occupied units continue to rise, driven largely by increases at turnover. Even in markets with low turnover and rent‑increase guidelines, landlords can significantly raise rents once a unit becomes vacant. In the first quarter of 2026, average rents for two‑bedroom units increased year‑over‑year in all major markets except Toronto, where gains remained modest.
Vacancy rates
Newly completed rental buildings are experiencing the highest vacancy rates. Completions in early 2026 are tracking above the same period in 2025, and CMHC’s Rental Market Survey shows vacancies concentrated in structures built after 2020 and in units near post‑secondary institutions. Older, stabilized buildings and family‑sized units remain much tighter, a divergence CMHC notes has intensified since its fall survey.
For renters, all this comes as good news: the short‑term imbalance is creating more choice and some negotiating power. Although average rents continue to rise for occupied units and at turnover, current vacancy levels point to more balanced conditions in Canada’s largest rental markets.
Read the full report on the CMHC website.
