Double the construction or pay the price: CMHC warns Canada’s housing gap isn’t closing

The agency estimates Canada needs between 417,000 and 469,000 new housing units per year until 2036 across both ownership and rental markets to restore pre-pandemic affordability levels. Under a business-as-usual trajectory, the country is currently on track to build roughly 231,000 homes annually over that period, leaving a shortfall of nearly half the required volume.

That pace would leave Canada nearly 2.4 million new homes short of its overall requirement over the 10-year timeframe.

“Although slower population growth has brought some improvements in affordability, new construction is slowing faster than demand. The key risk now is [that] Canada underbuilds during this softer market and finds itself further short of housing when demand strengthens again,” Aled ab Iorwerth, Deputy Chief Economist at CMHC, said in a statement.

High costs and weak condo markets slow progress

While federal policies to reduce immigration and limit temporary residents have temporarily calmed housing demand, high borrowing costs, elevated construction expenses and difficult presale financing conditions are curtailing developer activity.

The slowdown is particularly pronounced in the multi-family ownership market. Weak condominium pre-construction sales across major urban centres are causing developers to delay or cancel new projects, setting up a potential supply crunch once population growth and buyer demand rebound.

According to CMHC housing start data, builders recorded 131,851 housing starts through the first seven months of the year, down four per cent compared to the same period in 2025.

Regional divergence across Canadian cities

The national figures mask sharp variations across major census metropolitan areas:

• Toronto: The local supply gap narrowed slightly as lower home prices provided temporary relief, but new construction activity dropped sharply, particularly in the condo sector. The city still needs to boost annual housing starts by at least 50% over the next decade.
• Vancouver: The supply gap held steady. While purpose-built rentals now make up nearly 60 per cent of all starts in the region, falling condominium starts pose a threat to long-term homeownership access.
• Montreal and Ottawa: The housing gap widened in both markets. Construction remains heavily skewed toward rental units while ownership starts languish near multi-year lows.
• Calgary and Edmonton: Calgary saw its housing gap narrow significantly due to near-record residential construction. Edmonton remains the only major market in Canada without a structural supply gap, as home construction has consistently kept pace with population growth.

The agency defines its affordability benchmark as returning the share of income required for housing costs to 2019 levels, or ensuring adjusted housing expenses do not exceed 30% of gross household income. CMHC noted that while government financing programs and local zoning reforms are boosting purpose-built rental developments, private sector homeownership projects require stronger market momentum to close the gap.