Housing starts across Canada are running at historically impressive levels. But if you look closer, the story gets more interesting. Some markets are building like crazy while others have slowed to a crawl. And the type of housing being built varies dramatically from coast to coast.

What's happening in Calgary looks nothing like what's happening in Toronto. Understanding these regional differences matters if you're buying, selling, or just trying to make sense of where the market's headed.

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Strong Numbers, But Context Matters

Canadian housing starts are trending around 264,000 units annually. That's close to the highest we've seen since World War II. Sounds great, right?

Well, yes and no. When you account for how much Canada's population has grown, the picture becomes more moderate. On a per capita basis, we're building at a decent pace, but not an exceptional one. And here's the bigger issue: we still have a massive housing supply gap of around 400,000 units. We're building more homes than we used to, but we're still not building enough to catch up with what's needed.

The other thing worth noting is that most of this construction boom is coming from one specific type of housing: purpose-built rental apartments. Single-family homes, townhouses, and condos? Those are lagging behind. This shift tells you a lot about what's actually driving the market right now.

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Why Rentals Are Leading the Charge

Purpose-built rental construction is absolutely dominating. It now makes up about half of all housing starts in Canada. There are a few good reasons for this:

First, demand for rentals is strong. With home prices still elevated and mortgage rates higher than they were a couple years ago, more people are renting longer. Second, the government has been actively encouraging this type of construction with incentives like GST/HST cuts for builders and programs that offer attractive financing, including the Apartment Loan Construction Initiative and MLI Select.

And here's an interesting twist: some condo projects that developers had planned are being converted into rental buildings instead. The economics just work better right now for rentals than for condos, especially in markets where condo prices have been falling.

This shift has helped cool rent growth somewhat, which is good news for renters. But if you're looking to buy a home rather than rent, the construction of ownership-based housing hasn't kept pace.

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The Regional Breakdown

Every region across Canada has its own housing story. Here's what's happening in each major market:

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Alberta: The Superstar

Alberta is absolutely crushing it when it comes to homebuilding. Housing starts are running way above their long-term average, and it's not even close.

What's driving this? Population growth has been the biggest factor. Alberta led the country in attracting new residents over the past few years, especially younger people who tend to rent. Employment gains have been solid too, particularly for the 20-34 age group. Rental construction has been extremely strong as a result.

But it's not just rentals. There's also been a notable increase in townhouses and semi-detached homes. Calgary and Edmonton recently changed their zoning bylaws to allow more diverse housing types on land that was previously limited to single-family homes. That flexibility is showing up in the numbers.

Rent growth has cooled recently as population inflows have slowed, but rents in Calgary and Edmonton are still about 35% higher than they were before the pandemic. The demand is real.

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Quebec and Atlantic Canada: The Rental Boom

Quebec and the Atlantic provinces are seeing similar patterns. Rental construction is absolutely dominating the market. In Quebec, purpose-built rentals make up 85% of all housing starts. In Atlantic Canada, it's 75%.

Why so much rental activity? Part of it is cultural. Quebec has always had a higher percentage of renters compared to other parts of Canada. But the bigger story is affordability. Ownership has become significantly less affordable over the past few years, pushing more people into the rental market.

Construction costs haven't risen as dramatically in Quebec compared to places like Ontario or Alberta, which helps keep projects viable. Rents are elevated, about 60% higher than before the pandemic in some areas, though growth has cooled to around 2% as supply catches up.

Atlantic Canada mirrors these trends. Housing starts surged in 2025, driven overwhelmingly by rentals. There's been some increase in ownership housing too, supported by low inventory and high home prices, but rentals are the main story.

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British Columbia: Hanging In There

B.C.'s housing starts pulled back slightly in 2025, but they're still running above long-term averages. What's interesting is that condo construction hasn't collapsed the way you might expect given how weak demand has been.

Condo sales are way down in Metro Vancouver. Per capita home sales are about 35% below their long-term average. But condo starts haven't fallen nearly as much. Part of this might be that new home prices have only dropped about 5% from their 2022 peak, which means projects can still be profitable. Construction costs in B.C. haven't increased as much as they have in Ontario, which also helps.

Still, with demand staying weak, it's probably just a matter of time before we see a more significant pullback in condo building. The data might also be lagging. Housing starts are recorded when the foundation is fully poured, which can take months. So current numbers might not reflect the softer conditions that are happening right now.

Rental construction also eased in 2025 after a strong two-year run, but it's still above historical norms. Vancouver's housing strategy and the province's BC Builds program have both helped support rental construction.

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Ontario: The Struggling Giant

Ontario is the outlier. It's the only region where housing starts are running below their long-term average. And the Greater Toronto Area is driving most of that weakness.

Condo construction in the GTA has hit rock bottom. Starts are near their lowest level since the 2008 financial crisis. Pre-sale activity is equally grim. Condo pre-sales in Toronto dropped 55% in 2025, with only about 2,000 units sold. That's 90% below the 10-year average.

What killed the condo market? A few things came together at once. Rising interest rates made it harder for buyers to qualify for mortgages. Investors, who had been a huge part of the market, pulled back sharply. Many investors who bought pre-construction units at lower interest rates found themselves unable to close when rates jumped. At the same time, condo prices started falling, making these properties less attractive as investments.

Supply is also piling up. There are still about 55,000 condo units under construction in the GTA. As those get completed, they're adding to an already growing stock of unsold units. This further discourages new building.

Construction of other ownership housing, like townhouses and detached homes, isn't doing much better. New home prices have fallen about 8% from their 2022 peak. Prices could drop further to stimulate sales, but there's a limit. Toronto is an expensive place to build. Construction costs have risen more in Ontario than anywhere else in Canada when compared to pre-pandemic levels. Government fees are high too. Projects can only absorb so much price reduction before they stop being viable.

Purpose-built rental construction is providing some offset. It's stronger in the GTA than other types of housing, which keeps total starts from falling even further. But overall, Toronto's homebuilding is trending at levels last seen in the early stages of the pandemic.

Outside of Toronto, things look a bit better. Places like Kitchener, London, and other parts of Eastern and Northern Ontario are seeing healthier activity, supported by relatively flat condo construction and growing rental development.

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What's Coming Next

Housing starts are expected to ease across most of Canada over the next couple of years. The biggest factor will be population growth, which has slowed sharply since 2024.

When population growth slows, housing demand weakens. That hits the rental market first, since new arrivals typically rent before they buy. Rental vacancy rates are already climbing in many markets. As more rental projects get completed, vacancies will likely rise further, which will discourage new rental construction.

In markets like B.C., the stock of completed but unsold condo units is extremely high. That will continue to weigh on new condo starts. And in the GTA, weak pre-construction sales mean fewer projects are getting off the ground.

There are some supportive factors. The federal government has pledged to cut the GST/HST for first-time homebuyers purchasing new homes under $1 million. Ontario has matched that commitment. If this policy gets passed, it could boost sales by roughly 3,000 homes across Canada in 2026, which would then support starts in 2027 and 2028.

The federal government also established Build Canada Homes, a program aimed at supporting affordable housing construction and encouraging innovative building methods like prefabricated construction. The Parliamentary Budget Office estimates it could generate about 26,000 homes over five years, which would be a 2% annual boost to starts at current levels.

However, Build Canada Homes is rolling out at the same time that federal funding for other housing programs is being cut. So the net impact might be less than it appears on paper.

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The Supply Gap Will Close, But Affordability Won't Fix Itself

Here's the silver lining: even though housing starts are expected to cool, population growth is slowing so dramatically that the gap between new housing demand and new housing supply should close sometime in 2027.

That's a significant shift. For years, Canada has been in a position where we simply weren't building enough homes to keep up with how fast the population was growing. That imbalance drove prices higher and made the housing shortage worse. If the forecast is correct, that dynamic could reverse next year.

But closing the supply gap doesn't mean affordability will return to where it was before the pandemic. For that to happen, we'd need housing construction to stay elevated on a sustained basis, not just for a year or two. The market has a long way to go before ownership becomes as accessible as it once was.

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What This Means for Buyers and Sellers

If you're thinking about buying or selling, understanding these regional differences matters more than ever.

In Alberta, Saskatchewan, Manitoba, and Atlantic Canada, expect rental construction to stay strong for a bit longer before cooling off. If you're looking to buy in these markets, there's still decent inventory of ownership housing being built, especially townhouses and semis. Ownership affordability in the Prairies and parts of Atlantic Canada remains relatively healthy compared to other regions.

In B.C., condo construction might hold up longer than expected, but the rising stock of unsold units suggests caution. If you're buying a pre-construction condo in Metro Vancouver, pay close attention to how quickly similar units in the area are selling. The market is softer than the headline starts numbers suggest.

In the GTA, the outlook for ownership housing remains challenging. Condo pre-sales are dismal, and construction is near historic lows. This isn't great news for buyers hoping for more supply to come online soon. For sellers, the limited new construction means less competition from new builds, though resale demand is also soft right now.

Across the board, rental construction has been the bright spot. If you're a renter, more supply hitting the market should help keep rent increases in check. If you're an investor considering buying rental property, keep in mind that vacancy rates are rising. The rental market isn't as tight as it was a year ago.

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Final Thoughts

Canadian homebuilding is strong by historical standards, but the details reveal a more complex story. Not every region is performing equally. Not every type of housing is being built at the same pace. And the factors driving construction today, like rental demand and government incentives, are different from what drove it in the past.

Understanding these regional and structural differences helps you make better decisions. Whether you're buying your first home, selling a property, or trying to figure out what the market will do next, knowing where construction is strong and where it's weak gives you an edge.

The Canadian housing market isn't one market. It's a collection of regional markets, each with its own dynamics. And right now, those differences have never been more pronounced.