Sentiment index showed a deepening pullback in homeownership-focused construction to start 2026
Canada’s homebuilding sector entered 2026 on some of its weakest footing since the global financial crisis, with the latest Housing Market Index from the Canadian Home Builders’ Association (CHBA) pointing to near record-low confidence among builders focused on ownership housing.
The Q1 2026 results highlighted how rapidly the market has tilted away from new homes for ownership toward purpose-built rentals, even as governments unveiled new housing initiatives.
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.”
The multi-family index slid to 13.4, its third consecutive record low.
“The surge in purpose-built rentals has hidden in overall starts numbers the plummet of starts for homeownership,” the association said.
It added that official employment data often failed to capture sub-contracting, “masking the job losses and permanent loss of capacity for new home construction.”
Regional cracks widen beyond Ontario and B.C.
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.
The Atlantic provinces, meanwhile, saw “the first pessimistic reading on record for the single-family HMI since the survey began in 2021.”
“Ontario and BC were dismal, but the Prairies and Atlantic Canada were doing OK despite everything going on internationally,” CHBA CEO Kevin Lee told Canadian Mortgage Professional.
“We finally saw those numbers start to dip – not as bad as BC and Ontario, but that downward trend is hitting them as well. So even they are going to expect a slower year this year ahead.”
On the labour front, CHBA’s special questions showed that nationally “47% of builders said that they or their subcontractors have needed to lay off workers due to market conditions,” rising to 65% in Ontario.
CHBA also said that more than 18,000 residential construction jobs were lost in Ontario in 2025.
According to Canada Mortgage and Housing Corporation (CMHC), the seasonally adjusted annual rate (SAAR) of housing starts fell 6% to 235,852 units compared with 250,961 in February.https://t.co/E6K9wh5pHN
— Canadian Mortgage Professional Magazine (@CMPmagazine) April 17, 2026
Policy delays risk muting the impact of new support
CHBA pointed to recent federal and provincial measures as a potential turning point – if they were implemented quickly and aimed squarely at ownership affordability.
The association welcomed Ottawa’s $1.7 billion one-time cash injection to provinces “to reduce housing costs and support more housing supply,” including funding earmarked in Ontario to cover the federal portion of harmonized sales tax (HST) on homes under $1 million and partially up to $1.85 million.
Lee said it would be “critical that provincial governments use the funds effectively.”
“Reducing government-imposed costs is the most immediate and effective way to improve housing supply and affordability for homeownership,” Lee said in a statement.
“Eliminating taxes on new homes, reducing skyrocketing development charges, and finding low and no-cost measures to support homeownership affordability – like responsible changes to the mortgage stress test – should be part of a robust federal plan for supporting homeownership.”
Still, CHBA warned that slow political processes could undo much of that effort. The Q1 survey went into the field a day before Ontario announced plans to expand the HST rebate to all eligible buyers of new construction homes valued up to $1 million.
However, the association said the delayed rollout of rules and forms meant “buyers still [were] unable to officially claim the rebate,” and that similar lags in a previous GST rebate for first-time buyers has kept purchasers on the sidelines, “hurting supply and contributing to more labour loss.”
Broader shift from ownership to rental intensifies
Canada Mortgage and Housing Corporation revealed that units slated for rental markets accounted for 56% of all urban starts in Q1 2026. That translated to 27,437 rental units, an increase of 4,878 over the same quarter a year earlier.
The association said that as starts for ownership “continue their low performance,” the tradeoff from ownership to rental starts to accelerate and the index indicats “this will continue.”
Lee said broad-based layoffs risk leaving the sector without the capacity needed when demand eventually returns. This means “supply will continue to be constrained,” he said.
“Canada needs a comprehensive plan that includes support for homeownership to reach the government’s own housing targets and alleviate market-rate affordability challenges so that the next generation of Canadians can hope to have something close to the same opportunities as their parents.”
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