Edmonton and Calgary rank first and second, respectively, in housing supply gaps according to the Fall 2026 Housing Supply Report from Canada Mortgage and Housing Corporation (CMHC).
The gaps are the difference between housing supply and demand.
When demand is higher than supply, the large gap makes housing more unaffordable. A small gap promotes affordable housing. CMHC sees a shift in most markets in Canada to lower gaps, led by the Alberta cities..
"We see slower population growth, more balanced rental markets, improving affordability and elevated housing completions in many cities," reads the report. "However, the key risk is that Canada does not build enough during today’s market softening and falls short of housing when demand strengthens again. That would leave Canada significantly behind the 417,000 to 469,000 homes needed each year to restore pre-pandemic affordability by 2036."
CMHC's targets are likely out of reach.
The highest number of new homes started in any year in Canada was in 1976, when builders started 273,203 homes. In 2025, there were 259,028 starts.
CMHC assess affordability over a 10-year horizon, and while it expects slower housing activity in the near-term, it is forecasting stronger household formation, income growth and improving affordability will support housing demand over the next decade.
"The key risk is that there isn’t enough new supply when housing demand strengthens again," says the report.
Edmonton's supply/demand gap is the best in Canada, says CMHC.
"Edmonton remains one of the few major Canadian housing markets with no measured housing supply gap to restore pre-pandemic affordability levels. Construction activity has generally kept pace with demand, helping the region maintain stronger affordability than most large metropolitan areas," it says, adding there is "no measurable housing supply gap because housing construction has generally kept pace with population growth."
The construction pace has slowed in 2026,.
"Edmonton’s housing market moderated in the first half of 2026 following two years of record construction activity. Total housing starts declined 20% compared to 2025 levels. Despite the decline, the level of new construction remains above historical averages," says the report.
CMHC says the slowdown has been felt the most in construction of rental properties, with developers becoming more selective about launching new projects, but the condo market gained strength.
"Condominium apartments made up about 25% of apartment starts, up from only about 3% in 2023," it says. "These apartments still offer an attractive homeownership option for many first-time homebuyers and households downsizing from larger detached homes."
Down south on the QEII, Calgary has cut its supply gap in half, says CMHC.
"Calgary is one of the few major Canadian markets where the housing supply gap to restore pre-pandemic affordability levels has narrowed," it says. "Years of record housing starts have allowed supply to outpace demand. As a result, Calgary now needs between 4,000 and 5,000 additional units annually over the next decade to restore affordability."
As in Edmonton, construction activity slowed in the first half of 2026.
"Total housing starts declined more than 20%, with every dwelling type recording lower activity; despite the decline, 2026 starts were above recent historical averages," says CMHC, adding the lower starts are due to "rising vacancy rates, growing inventories, higher construction costs, and broader economic uncertainty. As a result, we expect supply growth to moderate once the current development pipeline is delivered."
Rental properties increased construction activity, but it has now slowed says CMHC.
"Purpose-built rental housing drove Calgary’s recent construction boom, but this segment is now leading the market slowdown. Rental starts fell more than 30%, while still accounting for almost 60% of all starts," it says.
"Because of the softer market conditions developers report rising numbers of unleased units, increased use of incentives, and unchanged or lower asking rents," says CMHC. "Some projects have been delayed, redesigned or cancelled as leasing conditions weaken."
The demand from home buyers is still strong, particularly in the condo sector.
"Condominium apartment starts increased 4%," says CMHC. "Completed, unsold condominium inventory fell by 59%, and several new condominium projects launched during the second quarter of 2026. The demand for relatively affordable ownership housing remains strong even as rental market conditions soften."