The headline number looked encouraging. Canada's seasonally adjusted annual rate of housing starts rose 4.5 per cent in February, climbing from 240,148 units in January to 250,900 units. After a rough January dragged down by brutal winter weather, builders got back to work. Fair enough.

But here's the thing about a single month of data in construction: it can mean almost nothing. One big multi-unit project breaking ground can swing the numbers dramatically in either direction. CMHC knows this, which is why they track a six-month moving average alongside the monthly figures. That longer trend edged up just 0.4 per cent to 256,005 units in February. Essentially flat. And that's probably the more honest story of where Canadian homebuilding actually sits right now.

CMHC deputy chief economist Kevin Hughes put it plainly: "The six-month trend in housing starts was essentially flat, indicating that the trend in new construction activity remains relatively steady despite ongoing monthly volatility." He then added something worth sitting with: business uncertainty and construction costs are expected to weigh on the rate and trend of housing starts in the near-to-medium term.

That's the agency responsible for tracking Canada's housing supply telling you, in careful language, that things probably get harder before they get easier.

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The Year-Over-Year Picture Is Better, But Context Matters

Pull back a bit further and the data looks more interesting. Actual housing starts were up 10 per cent year-over-year in February in centres with populations of 10,000 or more, with 15,886 units recorded versus 14,420 in the same month last year. Year-to-date, Canada has seen 31,974 units started through the first two months of 2026, up five per cent over the same stretch in 2025.

That's being driven in large part by British Columbia and Ontario. B.C. has seen a strong start to the year and Ontario's broader gains have been enough to offset a significant pullback in one specific market: Toronto.

Canada's largest city saw housing starts fall 28 per cent year-over-year in February, with both multi-unit and single-detached starts declining. That's a big number, and it reflects pressures that have been building in the GTA for a while now.

Meanwhile, Vancouver posted a 60 per cent year-over-year increase in starts, and Montreal was up 18 per cent, both driven by gains in multi-unit and single-detached construction. Those cities aren't without their own challenges, but they're clearly at a different point in the cycle right now.

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Toronto's Slowdown Is Structural, Not Seasonal

It's tempting to chalk up Toronto's decline to weather or short-term jitters. But what's happening in the GTA runs deeper than that. Pre-construction condo sales collapsed to their lowest levels in years as investors pulled back, and developers generally need strong pre-sale numbers to secure financing before breaking ground. When pre-sales dry up, the pipeline of new projects stalls. That's exactly what's happening.

CMHC's Housing Market Outlook projects Ontario housing starts will fall to near two-decade lows in 2026, concentrated in the GTA along with Ottawa and the Kitchener-Cambridge-Waterloo region. The condominium segment is taking the sharpest hit. Developers have delayed or outright cancelled projects because the math simply doesn't work when presale activity is this weak and construction costs remain elevated.

Unsold inventory at completion has surged across most of Canada's largest markets. Vancouver recorded the highest unsold condo inventory at completion; Toronto saw strong rises in both unsold condominiums and row homes. When completed units sit empty, lenders tighten credit and developers go quiet on new launches. It's a self-reinforcing cycle.

TD economist Rishi Sondhi, writing in response to the February data, called the monthly rebound "tepid." His broader read was sobering: "On a trend basis, starts have been generally cooling since September of last year. We think the pace of starts will continue to ease, impacted by weak population growth, high costs, elevated levels of unsold inventories, and very weak pre-sales activity in key markets like the GTA."

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Where Does This Leave the Bigger Picture?

CMHC's full-year forecast calls for roughly 247,000 housing starts in 2026, down from 259,000 in 2025, and the agency expects that slowdown to continue through 2027 and 2028 as developers work through an oversupply of unsold units and financing conditions stay tight for new project launches.

The pressures Hughes flagged, trade uncertainty, geopolitical risk, slower population growth, persistently high construction costs, aren't going away quickly. Canada has been running on the assumption that a growing population and tight supply would keep development moving. That calculus has shifted. Population growth has slowed significantly from the pace that fuelled years of aggressive development, and demand hasn't kept up with the pipeline of units already in progress.

Montreal and Calgary stand out as relative exceptions. CMHC expects Montreal starts to remain comparatively high through 2026, with rental construction continuing to drive activity. Calgary has moderated from its recent highs but is still performing above historical averages. These markets have their own dynamics, but they illustrate just how regionally fragmented Canada's housing story has become.

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For anyone watching the Kelowna and broader Okanagan market, the national data offers useful context without dictating local outcomes. Markets outside the major census areas often move on their own rhythms, shaped by local inventory, migration patterns, and the specific mix of housing types in demand. What's clear from the national picture is that construction is under real pressure, and the conditions that fuelled rapid new supply growth in recent years, cheap money, strong presales, fast-growing population, have changed in meaningful ways.

February's uptick in starts is real. It's just not the start of a new trend. At least not yet.