File:House Construction Labour Workers 1 – Invermere, British Columbia. (Photo by PatInver, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons)
The number of new homes constructed have weakened since the start of the year, according to a report by the Canada Mortgage and Housing Corporation’s (CMHC). The organization is also projecting further drops in new construction over the next three years.
“New construction is slowing,” the report authors wrote, as first reported by Blacklock’s Reporter. “Developers remain cautious and financing conditions stay tight.”
Home buyers and developers are taking a “wait-and-see” approach, as trade tensions persist, hindering economic growth, the CMHC report said.
Ongoing tariffs on steel, lumber, and other construction materials are keeping building costs high, the report noted, hampering Canada’s housing supply.
“The result is a near-term environment where many households are still priced out and builders are hesitant to break ground,” CMHC said.
“We’re now confident that some level of tariffs will remain in the coming years.”
It noted the “uncertainty and confusion” around the policies has “weighed on business confidence and slowed investment.”
“The headwinds are real and will have lasting impacts on Canada’s economy and play a more dominant role in our housing outlook,” the authors wrote.
Housing starts were 245,367 in 2024. That number is expected to fall to 237,833 for 2025, and decline to 224,948 in 2026. A further drop is expected in 2027, when housing starts are forecast to fall to 212,550.
CMHC forecast that construction of new homes will “decline sharply” in Ontario and B.C. due to high housing prices, rising construction costs, and low investor confidence.
The condominium industry has been particularly hard hit, CMHC said.
“Many condo projects are delayed, cancelled or converted to rentals. Developers are missing presale targets, and unsold inventory is rising. Falling prices and tighter credit are creating risks for buyers. These challenges are likely to persist through 2025,” the authors wrote.
The CMHC previously estimated that housing starts needed to double to meet the projected demand. It said that between 430,000 and 480,000 units were needed each year until 2035.
Chandra Philip is a news reporter with the Canadian edition of The Epoch Times.