A 'healthy starts trend' is likely to persist, according to a TD analysis, although there are some bumps in the road ahead
Canada’s homebuilding sector showed resilience in August, with stable building permits suggesting the recent drop in housing starts may be short-lived, according to TD Economics.
Although construction slowed last month, bank economist Rishi Sondhi noted the overall trend remains solid due to steady rental development and ongoing government support.
The latest data from Canada Mortgage and Housing Corporation (CMHC) revealed that Canadian housing starts fell 16% month-over-month in August, landing at a still-solid 245,800 units. “The pace of starts cooled last month. That said, they remain highly elevated on a trend basis, lifted by rental construction,” Sondhi said. The six-month moving average—a preferred gauge for smoothing out monthly swings—actually rose by 1.6% to 267,300 units, underscoring the sector’s underlying momentum.
“Investment in rental units has been supported by elevated rents in several markets, supportive government financing programs, and tax breaks on the construction of this type of housing,” Sondhi said.
Permits and policy support
Despite the August dip, TD Economics noted that the current level of building permits suggests starts are likely to remain robust for a while. “Looking ahead, stable building permits point to a maintenance of the healthy starts trend in the near-term,” TD said. However, some moderation is expected in 2026 as population growth slows and rents soften. "Meanwhile, past declines in pre-construction home sales should keep a lid on construction in the ownership market."
The federal government has announced new initiatives to boost home construction, including expanded financing for rental projects and incentives for municipalities to speed up approvals. Prime minister Mark Carney recently unveiled new details about Build Canada Homes, a centrepiece of his party’s spring federal election campaign aimed at addressing a generational housing crisis in Canada. One of its first projects include developing six public land sites in Toronto, Ottawa, Winnipeg, and Edmonton to deliver 4,000 factory-built homes, with additional capacity for up to 45,000 units nationwide.
Urban markets and regional trends
August’s moderation was most pronounced in urban areas, where multi-family starts dropped by 46,900 units to 183,400, following an exceptionally strong July. Single-detached starts also edged down by 1,800 to 40,300 units. The decline was broad-based, with activity down in nine of 10 provinces. Ontario and the Atlantic region posted the largest drops, while only Manitoba saw an increase in starts.
Ontario saw starts fall by 18,100 units to 56,100, and the Atlantic region dropped by 12,900 to 15,600 units. Starts also fell in BC, Quebec, and most of the Prairies. Manitoba stood out as the lone province to buck the trend, with starts rising by 3,600 to 8,600 units.
Overall, Canadian housing starts stayed flat in the first half of 2025, with big differences between cities, according to another CMHC report. Calgary, Edmonton, Montreal, Ottawa, and Halifax saw housing starts reach or approach record highs, while Toronto and Vancouver—Canada’s priciest markets—slowed national growth.
