January data showed a fourth straight drop in CMHC's housing starts trend
Canada’s homebuilding sector entered 2026 on weaker footing, with new figures from Canada Mortgage and Housing Corporation (CMHC) pointing to a slowdown that has already been building through late 2025.
The seasonally adjusted annual rate (SAAR) of housing starts fell 15% in January to 238,049 units from 280,668 in December, more than erasing the prior month’s gain.
CMHC’s six‑month trend – a smoother gauge that filters out month‑to‑month volatility – also moved lower, declining 3.5% in January to 254,794 units and marking a fourth consecutive monthly drop.
Actual housing starts in centres with populations of 10,000 or more edged up 1% year over year, to 16,088 units from 15,957 a year earlier, underscoring how the slowdown showed up more in the pipeline than in headline volumes.
“While actual starts in January were flat, the six‑month trend has decreased for the fourth consecutive month, which is in line with recent signs of slowing momentum in residential construction,” said Tania Bourassa‑Ochoa, CMHC’s deputy chief economist.
“We expect new construction to continue trending lower going forward as trade and geopolitical uncertainty, high construction costs, weaker demand, and rising inventories continue to constrain developer activity. As a result, near-term improvements in housing supply are unlikely, reflecting the on-the-ground sentiments we’ve heard from developers over the past several months.”
Vancouver up, Montreal down
Vancouver recorded a 37% jump in actual starts on higher multi‑unit and single‑detached activity, while Toronto slipped 2% on weaker single‑detached construction. Montreal saw a 44% year‑over‑year drop driven by fewer multi‑unit and detached starts. Rural starts were estimated at an annualized 19,867 units.
The latest figures followed a late‑2025 pattern in which November’s SAAR of 254,058 units and strong December activity masked a steady erosion in the underlying trend since early autumn, driven largely by pullbacks in Ontario and British Columbia.
“We expect Canada’s economy to grow slowly in 2026, as many households and businesses remain cautious because of geopolitical and trade uncertainty. This caution is leading many households to delay buying homes and making builders more hesitant to start new projects,” Kevin Hughes, CMHC deputy chief economist, previously said.
“These pressures will affect housing markets differently across the country. 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.”
CMHC’s 2026 Housing Market Outlook projects national housing starts to fall below their 10‑year average through 2028, with condo construction slowing and affordability targets slipping further out of reach.https://t.co/SE6FPvTFZh#housingmarket #realestate #affordability #CMHC
— Canadian Mortgage Professional Magazine (@CMPmagazine) February 10, 2026
Long‑term supply gap still loomed large
For mortgage professionals and lenders, the January slowdown sat uneasily alongside CMHC’s own estimates that Canada needed roughly 430,000 to 480,000 new housing units per year to restore affordability over the next decade – about double the country’s typical annual construction pace.
Developers already struggled for years to push annual starts much beyond 250,000, despite a sharp population increase and persistent supply shortages.
Danny Di Meo, president and founder of Toronto-based builder Caliber Homes, told Canadian Mortgage Professional there remained a disconnect in the current market between demand for homes and the feasibility of delivering that supply.
“There’s still real demand for housing but high interest rates, construction financing constraints, and cost pressures have made many projects – especially high-density ones – difficult to launch. We’ve seen a lot of projects across the GTA [Greater Toronto Area] go on hold for that reason,” he said.
“If municipalities can speed up site plan reviews, align permitting with infrastructure servicing, and reduce some of the red tape in the early stages, that would make a big impact.”
Moreover, sluggish housing starts and delayed projects threaten to drag down the economy, Fraser Institute previously warned. Canadian Home Builders’ Association (CHBA) chief executive officer Kevin Lee also said that Canada’s homebuilding crisis may already be even worse than it seems with housing starts essentially skewed by construction of purpose-built rental accommodation.
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