CMHC's latest housing data points to a risk most buyers aren't seeing yet
Recent improvements in housing affordability across Canada are at risk as new home construction slows faster than demand, particularly in the ownership market, according to Canada Mortgage and Housing Corporation's (CMHC) latest Housing Supply Report.
CMHC estimates that Canada needs between 417,000 and 469,000 housing starts annually to restore affordability to pre-pandemic levels by 2036, roughly double the current construction pace.
The national housing supply gap stands at between 187,000 and 238,000 homes per year and is broadly unchanged from CMHC's 2025 estimate.
"Although slower population growth has brought some improvements in affordability, new construction is slowing faster than demand," said Aled ab Iorwerth, Deputy Chief Economist at Canada Mortgage and Housing Corporation in Ottawa.
"The key risk now is Canada underbuilds during this softer market and finds itself further short of housing when demand strengthens again."
The warning arrives as national housing starts are forecast to fall below their 10-year average through 2028, driven by weak presales, high construction costs and rising inventories of unsold condominium units.
At the same time, affordability gains in Canada's housing market have started to run out of steam, with rate relief no longer available as a meaningful driver of further improvement.
Rachel Battaglia of RBC says housing markets across the country are moving at very different speeds, with Toronto losing momentum amid trade uncertainty while Vancouver posted an unexpected rebound in August.https://t.co/2bgTXdhQJu
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 10, 2026
Ownership supply falls behind as rental construction dominates
Across most major markets — with the notable exceptions of Calgary and Edmonton — new housing supply is increasingly concentrated in rental construction. While that shift has helped ease rental market conditions, CMHC warns it masks a deepening shortage on the ownership side.
In Toronto, only 156 condominium units were started within the city in the first half of 2026, compared with an average of roughly 7,000 annually over the previous decade.
The city still needs to increase its annual pace of housing starts by at least 50% over the next decade to return to 2019 affordability levels.
In Vancouver, condominium apartment starts — the region's primary source of new ownership units — fell a further 40% in the first half of 2026, their weakest level since 2011. Purpose-built rental apartments now accounting for about 60% of starts, up from less than 20% a decade ago.
Montreal's cost-to-income ratio has climbed from 34% to 48% since 2019, its highest level since the 1990s, and the city needs between 42,000 and 56,000 additional annual starts to restore pre-pandemic affordability.
Ottawa's supply gap has also widened, with the region requiring between 22,000 and 27,000 additional housing starts annually.
Halifax presents a different version of the same underlying problem. Years of record construction have pushed units under construction to a record 14,400 in the first half of 2026, up from fewer than 5,900 in 2021.
Rental units now account for 78% of all housing starts and 89% of units under construction. But stronger population growth has outpaced even that elevated supply, eroding ownership affordability as new homes skew heavily toward rental.
Infrastructure constraints — particularly water and wastewater servicing capacity — are also emerging as a ceiling on future development, threatening to slow supply growth once the current pipeline is delivered.
| Region | BAU starts (annual) |
Starts needed (annual range) |
Annual supply gap (range) |
Gap vs. 2025 |
|---|---|---|---|---|
| Toronto | 42,000 | 62,000–68,000 | 20,000–26,000 | ▼ Narrowed |
| Ottawa | 11,000 | 33,000–38,000 | 22,000–27,000 | ▲ Widened |
| Montréal | 22,000 | 64,000–78,000 | 42,000–56,000 | ▲ Widened |
| Vancouver | 20,000 | 25,000–27,000 | 5,000–7,000 | ● Unchanged |
| Calgary | 19,000 | 23,000–24,000 | 4,000–5,000 | ▼ Narrowed |
| Edmonton | 15,000 | 15,000 | None | ✓ No gap |
| Canada (national) | 231,000 | 417,000–469,000 | 187,000–238,000 | — |
BAU = business-as-usual annual housing starts projected if current trends continue. The range reflects varying assumptions about how strongly homeowners and renters respond to lower housing prices. Halifax is not included in CMHC’s supply gap table. Source: CMHC Fall 2026 Housing Supply Report, published September 10, 2026.
Calgary and Edmonton prove the outliers
Not every market is falling behind. Calgary has nearly halved its housing supply gap through sustained construction activity and now requires an estimated 4,000 to 5,000 additional units annually, a significantly more manageable deficit than most large Canadian markets.
Edmonton remains the only major Canadian market without a measurable housing supply gap, supported by condominium apartment starts that rose 14% in the first half of 2026.
For brokers advising clients on market timing, a record 10 consecutive quarterly improvements in housing affordability may be approaching their limit.
If Canada underbuilds through the current softer period, the window of easing prices and improved conditions risks closing before it translates into lasting structural relief, leaving the country significantly further behind its affordability targets when demand returns.
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