Canada Housing Starts Rise in 2025, but CMHC Warns of Future Supply Risks

CMHC housing starts report 2025 highlights strong rental construction but weaker condo market

OTTAWA — Canada recorded a 6 per cent increase in housing starts in 2025, driven largely by record levels of rental apartment construction and growth in “missing middle” housing such as multiplexes, stacked townhouses and accessory suites.

However, a new report from Canada Mortgage and Housing Corporation (CMHC) warns that underlying weaknesses in the homeownership market could create supply challenges in the years ahead.

The findings are detailed in CMHC’s latest Housing Supply Report, which examines housing construction trends across major Canadian metropolitan areas.

Rental Construction Drives National Growth

The report found that record rental construction activity was the primary factor behind the national increase in housing starts last year.

Cities including Calgary, Edmonton, Ottawa, Halifax and Montréal saw particularly strong rental development activity, while Toronto recorded its second-highest rental construction level on record.

At the same time, construction of “missing middle” housing — including low-rise apartments, row houses and multiplex units — increased by about 10 per cent across Canada’s seven largest Census Metropolitan Areas (CMAs).

Challenges in the Homeownership Market

Despite the overall rise in housing starts, CMHC says the homeownership segment of the housing market weakened significantly in 2025, particularly in the condominium sector.

Condominium presales declined sharply, and growing unsold inventories have raised concerns that new housing supply may not match the needs of future homebuyers.

“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, Deputy Chief Economist at CMHC. “However, homeownership supply, particularly in the condominium segment, continues to face significant challenges in the face of falling presales.”

The report notes that weaker buyer demand and tighter financing conditions for developers are contributing to project delays, cancellations and conversions from ownership developments to rental housing.

Because residential construction timelines can span several years, CMHC warns that fewer ownership projects starting today could lead to future housing shortages once demand rebounds.

Toronto Shows Major Shift Toward Rentals

The report highlights significant changes in housing development trends in the Toronto Census Metropolitan Area.

For the first time this century, rental housing starts surpassed condominium starts in the City of Toronto, reflecting a broader shift among developers away from ownership-based projects.

Builders have increasingly focused on smaller-scale housing types such as three- to five-unit buildings, rather than large condominium towers with more than 100 units.

While housing starts in Toronto declined compared with previous years, housing completions remained relatively high, temporarily easing market conditions.

CMHC warns that this short-term balance could eventually lead to a sharper supply gap in the future if new projects continue to slow.

Regional Trends Across Canada

Other major Canadian markets showed mixed results in the report.

• Vancouver saw housing conditions ease as record completions coincided with weaker demand, although high land costs and falling condo presales are slowing new projects.

• Montréal experienced record rental construction levels, with rental units accounting for more than 80 per cent of housing starts in 2025.

• Calgary reached another record year for housing starts, surpassing both Toronto and Vancouver.

• Edmonton also recorded record starts, supported by rezoning policies and relatively affordable housing prices.

• Ottawa saw near-record housing starts driven by rental construction and transit-oriented development incentives.

• Halifax continued to see strong rental-focused development, although labour shortages are increasingly affecting project timelines.

Long-Term Housing Supply Concerns

CMHC’s report concludes that while Canada’s homebuilding sector showed resilience in 2025, the decline in ownership-focused projects could create supply constraints later in the decade.

If the trend continues, fewer new condominiums and ownership units entering the market could worsen affordability challenges for Canadians hoping to purchase homes in the future.

The Housing Supply Report forms part of CMHC’s ongoing research used to inform housing policy and affordability strategies across the country.

---

GTA Today — Real News. Local Stories. Trusted Reporting Across the Greater Toronto Area.