Housing construction across Canada is projected to decline for the next three years, not rise, despite Ottawa’s ambitious promises to dramatically increase supply, according to new data from the Canada Mortgage and Housing Corporation.“New construction activity is projected to decline throughout 2026 to 2028, falling well below the historical 10-year average,” said CMHC’s latest Housing Market Outlook. “Developers face higher construction costs, weaker demand and rising inventories of unsold units.”The federal mortgage insurer’s forecast stands in stark contrast to cabinet’s stated goal of reaching at least 500,000 housing starts annually to restore affordability. Last year, urban housing starts totalled 241,171 — less than half the level ministers have suggested is necessary.CMHC analysts warned economic growth will average just 0.7 % this year, making 2026 “one of the weakest years in recent decades outside of recession.”“While a recession is not in the baseline forecast, ongoing geopolitical and economic uncertainty combined with low expected growth means the risk of an economic slowdown cannot be ruled out from the forecast horizon,” the report said.The slowdown in construction is expected to be broad-based..“New home construction is set to decline through 2028 as developers face high costs, weaker demand and more unsold homes,” CMHC wrote. Condominium projects are forecast to be especially weak, while rental construction — though still driving new supply — is expected to moderate over the outlook period.Regional disparities will be significant.In British Columbia, housing starts are “expected to drop sharply, reaching historically weak levels,” the report said. Ontario is projected to see overall starts fall near two-decade lows in 2026. Québec will experience only small declines from elevated levels next year before further drops after 2027.The Prairies are the exception, with housing starts forecast to remain above historical averages. CMHC did not publish forecasts for Atlantic Canada or the territories..The sobering outlook follows the February 5 introduction of Bill C-20, An Act Respecting The Establishment Of Build Canada Homes, legislation that would create a new Crown corporation aimed at boosting residential construction.“We are in a housing crisis,” Housing Minister Gregor Robertson said at the time.Robertson said increasing supply would depend heavily on attracting private investment. “The number of homes we can deliver does rely on how much private capital we can attract and crowd into finance projects,” he said. “We’ll be pushing to attract as much private capital as possible, getting far more affordable housing built than in the typical model of just public funding.”However, when asked why no specific unit target had been set for the proposed Crown corporation, Robertson acknowledged there were no firm top-line goals.“Build Canada Homes as a Crown corporation will clearly be accountable to Canadians and government,” he said. “There aren’t top line targets set for the number of homes to build.”With starts projected to fall well short of federal aspirations and economic growth barely above stall speed, CMHC’s forecast raises fresh questions about whether Ottawa’s housing strategy can deliver the dramatic supply increases it has promised.
