GDP cooled while permits and price pressures reshape 2026 project pipelines
Canada’s construction sector ended 2025 on uneven ground, but not on the brink.
Output slipped in the final quarter even as permits rebounded and demand for new housing and infrastructure projects remained firm, setting up an early‑2026 landscape defined by tight budgets rather than empty order books.
Growth cooled but demand held up
The Canadian Construction Association’s latest Construction Quarterly Economic Insights report showed construction GDP easing 0.6% in Q4 2025. That's the first pullback after six straight quarterly gains, as higher borrowing costs and slower population growth weighed on activity.
However, permit values moved the other way. National building permits rose 9.8% in the quarter – the strongest gain since 2021 – on broad provincial increases and a resurgence in multi‑unit projects, according to the CCA analysis of Statistics Canada data.
That upswing provided what the association described as a more stable starting point for 2026 work pipelines, even as project timelines and scopes were reworked.
“The data shows that the fundamentals of our sector remain strong, even as risks continue to grow,” said Rodrigue Gilbert, president of CCA.
“Builders are adapting to rising costs, weaker population growth, and growing geopolitical uncertainty. But with the right policy environment, our industry is ready to deliver the housing and infrastructure Canadians urgently need.”
Costs bite into steel‑heavy projects
StatCan’s Building Construction Price Index showed non‑residential construction costs up 4.1% year over year in Q4 2025, led by metal fabrications and structural steel, with factory construction posting some of the fastest increases.
Recent CCA and private‑sector cost guides pointed to elevated wage bills, stricter building‑performance standards, and tariff uncertainty as key drivers of those increases, particularly for steel‑intensive and industrial builds.
“Canada’s building needs aren't going away, and neither are the challenges,” Gilbert said.
“But our industry is optimistic. We see a clear path forward if governments at all levels work with us to modernize procurement, reduce barriers, and streamline delivery.”
Builder confidence sinks
Meanwhile, Canada’s homebuilding sector entered 2026 on some of its weakest footing since the global financial crisis.
The latest Housing Market Index from the Canadian Home Builders’ Association (CHBA) revealed near record-low confidence among builders focused on ownership housing.
According to CHBA, the single-family index fell 5.5 points from last year to 20.9 in the first quarter, “just 1.3 points above the all-time record low.”
While Ontario and British Columbia already posted “extremely negative sentiment,” CHBA said early 2026 saw previously resilient regions start to slip.
The Prairies recorded their first recent pessimistic reading for the multi-family index, with a score of 37.6 and a year-over-year decline of more than 35 points.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
