Canada's seasonally adjusted annual rate of housing starts fell 17% in October to 232,765 units, down from 279,174 in September. That's less than half the 430,000 to 480,000 new housing units per year CMHC estimates Canada needs over the next decade to restore affordability to 2019 levels.
The drop came as starts in Ontario and British Columbia fell sharply, led by Toronto's 42% year-over-year decline and Vancouver's 36% decrease. Both cities saw notable drops in multi-unit starts, with Toronto also recording considerably lower single-detached home construction.
"It's no surprise to see starts fall in Vancouver and Toronto, where developers have next to no interest in building condos, and little room to build anything else," said Clay Jarvis, a mortgage expert at NerdWallet. "But starts in non-urban areas are trending down as well."
Montreal Bucked the Trend
While Toronto and Vancouver struggled, Montreal posted a 104% year-over-year increase in actual housing starts, driven by significantly higher multi-unit starts. Calgary and Edmonton also contributed to keeping the national year-to-date total elevated compared with the same period last year.
Actual housing starts in centres with a population of 10,000 or greater were down just 3% year-over-year, totalling 19,174 units compared with 19,763 in October 2024. The year-to-date total was 197,207, up 5% from the same period in 2024.
That year-to-date increase masks what's actually happening month-to-month. Starts are trending down, not up. The six-month moving average dropped to 268,907 units in October from 277,081 in September, the third consecutive monthly decline.
Ontario and BC Are Collapsing
"Both the six-month trend in housing starts and the seasonally adjusted annual rate were pushed lower in October by significantly lower monthly starts in Ontario and British Columbia," said CMHC Deputy Chief Economist Tania Bourassa-Ochoa.
"While these results are generally reflective of investment decisions made months or even years ago, they also highlight persistent and significant regional contrasts in housing construction trends across the country."
That's a diplomatic way of saying Toronto and Vancouver's construction markets have stopped functioning. Developers have no interest in building condos because pre-sales have collapsed. New home sales in the GTA were down 82% from the 10-year average as of September. Just 53 condos sold in Toronto that month.
When developers can't sell units, they can't get financing. When they can't get financing, projects don't proceed. And when projects don't proceed, housing starts fall.
The Federal Budget's $25 Billion Won't Fix This
The Liberal government's 2025 budget tabled November 4 pledged to spend $25 billion on housing over the next five years. It called attention to CMHC's estimate that 430,000 to 480,000 new housing units are needed per year in the next decade to restore affordability to 2019 levels.
That would represent around double the current pace of home construction across the country. And October's data suggests we're moving in the wrong direction, not toward that goal.
"In the wake of the recently released federal budget, with its high hopes around housing development, today's starts data is an important reminder of just how difficult it is to get new projects off the ground," Jarvis said.
The Conservative Party issued a statement following the CMHC report. "Mark Carney promised to build 500,000 new homes a year at speeds not seen since the Second World War. Today, his own agency confirmed that the seasonally adjusted annual rate of housing starts collapsed 17% in October to less than half of his target."
Why Starts Are Falling
TD economist Rishi Sondhi noted that despite the October dip, homebuilders are still starting new units "at a fairly healthy clip," supported by the purpose-built rental market.
"Notably, homebuilding in the rest of Canada is much stronger than in Ontario, as the latter is being weighed down by a retrenchment in condo construction," he said.
"Looking ahead, the softening trend in building permits suggests some further downside for starts in the near-term. This is consistent with our view that homebuilding is likely to cool next year, as modest population growth weighs on rents, and weak pre-sales activity restrains starts in the ownership market."
That's the core problem. Slower population growth reduces rental demand, which makes purpose-built rentals less attractive. Weak pre-sales activity means condo projects can't proceed. And the combination pushes starts lower across both ownership and rental construction.
Toronto Is On Track for 30-Year Low
CMHC's Fall 2025 Housing Supply Report showed homebuilding activity in Toronto fell to its lowest point since 1996 on a per-capita basis, mainly due to a 60% drop in condominium starts during the first half of the year.
The decline came amid weaker investor demand for condos, leaving projects less feasible and more prone to cancellations or delays. When 70% of condo buyers are investors and those investors stop buying, the entire market freezes.
Toronto is on pace for the lowest total annual housing starts in 30 years. Not per capita. Total. Despite the city's population being significantly larger than it was 30 years ago.
Vancouver Isn't Much Better
In Vancouver, condo starts fell 13.4% during the first half of 2025, with weak pre-construction sales resulting in paused and cancelled projects.
CMHC noted development charges were a significant barrier to homebuilding in Vancouver, though new provincial regulations set to take effect next year will allow for the deferral of about two-thirds of development charges until occupancy.
That might help future projects, but it doesn't solve the current problem. Developers still face high costs, uncertain demand, and financing challenges that make proceeding with new projects risky.
The Supply Gap Is Widening
Canada needs 430,000 to 480,000 housing starts per year for the next decade to restore affordability to 2019 levels. October's seasonally adjusted annual rate was 232,765. That's a gap of roughly 200,000 units per year.
And the trend is moving in the wrong direction. The six-month moving average has declined for three consecutive months. Building permits, a leading indicator of future starts, are also softening.
If current trends continue, Canada will fall further behind on housing supply, not catch up. The shortage will worsen, not improve. And affordability will deteriorate further, not restore.
What This Means for Real Estate Markets
Falling housing starts have direct implications for future supply and prices. When new construction slows, existing home inventory becomes more valuable because there's less competition from new product.
For buyers, it means less choice in new homes and potentially higher prices for resale homes as supply constraints intensify. For sellers, it could provide support for prices if demand holds steady while new supply dwindles.
For investors, it creates a challenging environment. Rental construction is still happening, but slowing population growth threatens rental demand. Condo construction has collapsed, but that might create opportunities if supply tightens enough to push prices higher in future years.
How Coldwell Banker Horizon Realty Can Help
At Coldwell Banker Horizon Realty, we understand that housing starts data affects real estate markets in complex ways. Whether you're evaluating new construction options versus resale, assessing investment opportunities in a market with declining starts, or wondering how supply trends will affect your neighborhood's values, we provide the expertise and local knowledge you need.
Understanding the relationship between housing starts, future supply, and market dynamics requires professional insight from people who track these indicators daily.
Contact Coldwell Banker Horizon Realty today to discuss how declining housing starts are affecting your area and what it means for your real estate decisions, whether you're buying, selling, or investing.
The Bottom Line
Canada's housing starts fell 17% in October to 232,765 units, less than half what CMHC says is needed to restore affordability. Toronto starts dropped 42% year-over-year. Vancouver fell 36%. Ontario and British Columbia are driving the national decline.
Montreal, Calgary, and Edmonton are picking up some slack, but not enough to offset the collapse in Canada's two largest markets. The year-to-date total is still up 5% from 2024, but that's because the first half of the year was stronger. Recent months show clear deterioration.
The federal government's $25 billion housing plan won't matter if developers can't sell units, can't get financing, and can't make the economics work. Money doesn't build homes. Viable projects build homes. And right now, too many projects aren't viable.
CMHC estimates Canada needs to double its current pace of construction to restore affordability. Instead, we're moving backward. October's 232,765 annual pace is down from September's 279,174. The six-month moving average is declining. Building permits are softening.
Every month that starts remain below 400,000 units, the supply gap widens. Every project that gets cancelled or delayed pushes the affordability crisis further into the future. And every developer that walks away from condo construction because the numbers don't work means fewer homes for Canadians who need them.
The housing crisis isn't getting better. It's getting worse. And October's housing starts data proves it.
The content of this article is for informational purposes only and should not be considered as financial, legal, or professional advice. Coldwell Banker Horizon Realty makes no representations as to the accuracy, completeness, or suitability of the information provided. Readers are encouraged to consult with qualified professionals regarding their specific real estate, financial, and legal circumstances. The views expressed in this article may not necessarily reflect the views of Coldwell Banker Horizon Realty or its agents. Real estate market conditions and government policies may change, and readers should verify the latest updates with appropriate professionals.
