Canada’s housing starts rose 6% in 2025, driven by record rental-apartment construction and increased development of missing-middle housing, says a new Canada Mortgage and Housing Corporation report.

Despite the annual gain, underlying weaknesses persist, particularly in the homeownership market, according to the federal agency’s latest Housing Supply Report. The findings come after CMHC has repeatedly warned that housing starts continue to slow down.

CMHC noted that condominium presales have collapsed and rising unsold inventories suggest current supply may not align well with the needs of prospective homebuyers. Softer demand and tighter financial conditions for developers are also leading to project delays, cancellations, or conversions to rental units, threatening the future pipeline of ownership housing when economic conditions improve. The risk is particularly pronounced in Vancouver and Toronto.

Overall, the resiliency of Canada’s homebuilding industry in 2025 was driven by record rental construction in Calgary, Edmonton, Ottawa, Halifax and Montreal, along with the second-highest level of rental construction ever recorded in Toronto. Starts of missing middle housing — including low-rise apartments, multiplexes, row homes, stacked townhouses and accessory suites — rose about 10% in 2025 across the seven major census metropolitan areas covered by the report.

“On the surface, housing starts last year were quite strong, outpacing annual starts in 2024 and led by historic levels of rental starts and completions,” said Tania Bourassa-Ochoa, a CMHC deputy chief economist. “This new supply has contributed to the easing of rental- market conditions in many of Canada’s major centres.

“However, homeownership supply, particularly in the condominium segment, continues to face significant challenges in the face of falling presales. This threatens both the availability and affordability of ownership options for Canadians in the medium term. Since construction timelines can span years, a slowdown in starts today sets the stage for future supply constraints.”

In Toronto, rental starts exceeded condo starts within the city limits for the first time this century, reflecting a broader shift across the metropolitan area, said CMHC. Developers moved away from larger ownership projects, with buildings containing three to five units becoming more common than developments with more than 100 units. Although total housing starts fell significantly from recent years, elevated completions helped ease near-term market conditions, though CMHC warned the slowdown could create a sharper supply gap over the longer term.

Vancouver’s housing market also eased in 2025 as slower population growth weakened demand while record completions followed several years of strong housing starts. However, the viability of new projects came under increasing pressure due to land scarcity and high costs, which slowed rental construction, while weak pre-construction sales weighed on the condo market. Missing-middle housing provided a bright spot as densification policies supported increased construction.

In Montreal, rental construction continued to dominate housing development, reaching record levels and accounting for more than 80% of housing starts in 2025, while condo starts fell to a record low. The current environment reflects abundant supply and weaker demand, but CMHC said declining housing starts in coming years could lead to lower completions and renewed affordability pressures once demand recovers.

Calgary recorded another record year for housing construction in 2025, surpassing both Toronto and Vancouver in total housing starts. Growth was led by rental and missing-middle housing, supported by favourable financing and zoning reforms, though labour shortages and building capacity pressures are increasingly lengthening construction timelines and creating risks for future supply.

Edmonton also reached a record high in housing starts, supported by government incentives, rezoning and relative affordability. The city saw strong growth in both rental and ownership housing, including condominium starts, unlike many other major markets. Missing-middle housing continued to expand as density increased, while high completions and more resale listings boosted overall inventory.

In Ottawa, rental construction dominated development and pushed total housing starts close to record levels, aided by incentives for transit-oriented development. Medium-density and missing-middle housing, including conversions, also reached new highs. However, CMHC noted that many of the projects now being completed were planned under more favourable financing conditions, with recent starts trending lower, suggesting that supply could tighten as demand recovers.

Halifax saw more balanced market conditions in 2025 as strong completions and higher resale listings combined with softer demand. Construction remained focused on rental housing, with missing-middle development and projects near urban transit hubs remaining elevated. However, builders operating near full capacity face growing labour shortages, leading to project delays and postponements that could threaten future supply.

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Photo: TD Economics