Canada’s Housing Starts Stall in First Half of 2025: CMHC Report Highlights Condo Slump and Regional Divides
Canada’s residential construction sector showed little momentum in the first half of 2025, with overall housing starts remaining flat compared to the same period in 2024, according to a new report from the Canada Mortgage and Housing Corporation (CMHC). While single-detached homes and purpose-built rentals saw some gains in certain regions, a sharp decline in condominium projects—particularly in major urban centers—dragged the national figures, raising alarms about future supply amid affordability pressures.
This stagnation, detailed in CMHC’s latest Housing Starts Report released on September 9, 2025, underscores the uneven recovery in Canada’s housing market, with booming activity in the Prairies and Quebec offsetting slumps in Toronto and Vancouver.
Flat National Starts: A Tale of Two Markets
CMHC’s data reveals that total housing starts across Canada held steady year-over-year in the first six months of 2025, with no significant growth despite government incentives for rentals. Urban centers with populations over 10,000 saw actual starts hover around historical averages, but the composition shifted dramatically: Purpose-built rental apartments surged in some areas, buoyed by federal tax breaks and low-interest loans, while condominium developments plummeted due to weak investor demand and high financing costs.
The report attributes the flatline to a “pullback in investor confidence,” with developers delaying or canceling condo projects amid elevated interest rates and softening pre-sale markets. Overall, apartment starts (including condos and rentals) comprised nearly three-quarters of new builds, but the condo segment’s woes—down 13.4% in Vancouver and 60% in Toronto—eclipsed rental gains.
Regional Hotspots and Cold Spots: Toronto’s Historic Low
Canada’s housing construction painted a patchwork picture, with stark contrasts between thriving mid-sized cities and struggling metropolises. Calgary, Edmonton, Montréal, Ottawa, and Halifax posted record or near-record paces for single-detached and rental starts, driven by population growth and affordable land. For instance, Greater Sudbury, Ontario, ranked among the top five for growth, with starts jumping from 77 to 164 units year-over-year.
Conversely, the slowdown in Toronto and Vancouver—Canada’s priciest markets—left national figures unchanged. Toronto’s per-capita homebuilding hit its lowest since 1996, on track for the fewest annual starts in 30 years, largely from the condo crash. In Montréal, condo units under construction reached a 15-year low, as new builds proved too expensive for buyers. Vancouver mirrored this, with a 13.4% condo drop, though its resale market offered some buffer.
Why the Condo Crunch? High Costs and Fading Demand
The condo decline stems from multiple headwinds: Soaring construction costs, development charges, and interest rates have eroded project viability, leading to cancellations and delays. Investor pullback—once a condo lifeline—has intensified, as resale and rental markets weaken, leaving developers short of pre-sale targets. In Toronto, unsold inventory ballooned to 58 months of supply, 14 times higher than 2022 levels.
Rental apartments bucked the trend, hitting record shares (nearly half of apartments started), thanks to incentives like GST exemptions and increased Canada Mortgage Bonds limits. However, even rentals dipped 8% nationally, signaling broader caution.
Expert Warnings: Supply Risks and Affordability Pressures
Tania Bourassa-Ochoa, CMHC’s deputy chief economist, cautioned that the slowdown “presents risks to future housing supply,” potentially exacerbating affordability woes when demand rebounds. Developers advocate for cuts to costs and charges to revive condos, while CMHC’s outlook predicts starts will dip further in 2025 before stabilizing above 10-year averages by 2027.
Analysts like those at RSM note “growing imbalances” at provincial levels, with Prairies accelerating while Ontario and B.C. lag. On X, reactions trend toward concern: “Flat starts mean no relief for renters or buyers—when will policy fix this?” Builders and economists call for zoning reforms and incentives to spur densification.
Implications for Canadians: Economy, Affordability, and U.S. Ties
For everyday Canadians, flat starts spell continued housing shortages, with CMHC estimating a 3.5 million unit gap by 2030. Affordability suffers as supply lags demand from millennials and immigrants, pushing rents and prices higher in urban hotspots.
Economically, the sector—employing 1.3 million—faces ripple effects: Slower construction could trim GDP growth by 0.5% in 2025, per forecasts. U.S. tariff threats under Trump add uncertainty, potentially inflating material costs and stalling projects further. Politically, it pressures Ottawa for more incentives, amid debates on immigration cuts impacting demand.
Lifestyle hits home: Young families in Toronto delay moves, while Prairie booms offer migration perks. Sports fans in expanding cities like Calgary might see new stadium-adjacent developments, but urban dwellers face longer commutes in cramped rentals.
Conclusion: A Stagnant Start to a Challenging Year
CMHC’s report paints a flat first half for Canadian housing starts in 2025, with condo declines in Toronto and Vancouver overshadowing rental gains elsewhere. As regional divides widen and supply risks mount, the path to affordability remains bumpy—demanding bolder policies to unlock construction.
Looking ahead, CMHC eyes a 2026 rebound if rates fall and incentives stick. For now, homebuyers and renters brace for tight markets, while builders pivot to rentals for stability.