Feb 20, 2026
Canada’s housing market is heading into a slower construction cycle, with new home starts projected to decline over the next three years as economic uncertainty weighs on buyers and builders.
According to CMHC’s latest Housing Market Outlook, housing demand will remain subdued in 2026 and beyond. Sales are expected to stay below historical averages, while prices show only modest gains after declines in 2025.
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“We expect Canada’s economy to grow slowly in 2026, as many households and businesses remain cautious because of geopolitical and trade uncertainty,” Kevin Hughes, deputy chief economist at CMHC, said in a statement. “This caution is leading many households to delay buying homes and making builders more hesitant to start new projects.”
Slower growth, cautious households
CMHC forecasts real GDP growth of just 0.7% in 2026 (1). High unemployment, modest income growth, slower population increases and mortgage renewals at higher rates are all expected to limit housing demand.
National home sales are projected to edge up in 2026, largely because Ontario and British Columbia are rebounding from especially weak levels. Even so, sales will remain below long-term norms. Prices are expected to stabilize nationally, though Ontario could see further declines in 2026 before a recovery begins in 2027.
Rental markets are also shifting. As new supply comes online, vacancy rates are expected to rise in several major cities, slowing rent growth and giving renters more flexibility.
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Fewer new homes, especially condos
CMHC expects total housing starts to fall from 259,000 in 2025 to about 247,000 in 2026, with further declines through 2028. That would put construction below the 10-year average.
The condo sector is likely to see the sharpest slowdown, particularly in Toronto and Vancouver, where pre-construction sales have dropped and financing has become harder to secure. Developers are focusing on finishing existing projects rather than launching new ones.
For buyers, that could mean:
- Fewer new condo units entering the pipeline
- Less choice in certain markets, especially in Ontario and B.C.
- Ongoing price pressure where inventories remain high
Ontario is projected to see starts fall to near two-decade lows in 2026, largely due to the condo slump. British Columbia is also expected to see a marked decline. In contrast, construction in the Prairies and Quebec is forecast to remain above historical averages, even if it cools from recent highs.
A regional story
CMHC expects significant differences across the country.
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Toronto and Vancouver are forecast to face weaker sales and construction relative to their 10-year averages. Montreal and Calgary, by contrast, could see stronger activity supported by local economic conditions.
“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,” Hughes said.
For consumers, the outlook points to a more restrained market rather than a dramatic downturn. Buyers may find more balanced conditions in some cities, while renters could see some relief as vacancy rates rise. But with economic growth expected to remain slow and downside risks still present, housing activity is unlikely to see a significant surge anytime soon.
Article sources
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CMHC (1)
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Steven Brennan is a freelance finance writer based in Vancouver, BC. He holds a BA and an MA from Maynooth University, Ireland. His work regularly appears at Canadian Mortgage Trends, Lowest Rates, Loans Canada and other Canadian and US brands, while also working as a ghostwriter for financial influencers.
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