Canada's Housing Starts Decline Amidst Permit Approvals

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Despite an increase in building permits, housing starts in Canada have seen a significant decline, raising concerns about long-term housing supply and affordability.

In September, the Canada Mortgage and Housing Corporation (CMHC) reported that there were 143,929 homes with approved building permits that had yet to begin construction. This figure, which reflects the status across urban centers with populations of 50,000 or more, marked a 1.1% increase from the previous month of August. However, in a year-over-year comparison, housing starts have decreased. Specifically, actual housing starts in urban centers with populations of 10,000 or more fell by 11% in September, totaling 19,984 units compared to 22,375 units in the same month last year. Over the first nine months of the year, these centers recorded 170,964 housing starts, which is 4% lower than the same timeframe in 2025.
Aled ab Iorwerth, the deputy chief economist at CMHC, highlighted a pressing concern in the latest Housing Supply Report (HSR), indicating that Canada faces a significant risk due to insufficient construction activity amid a softening housing market nationwide. He stated, "Canada still faces a long-term housing supply gap, and unless housing construction levels increase, improvements in housing affordability since 2023 will be difficult to sustain."
Currently, housing starts are trailing behind last year's figures. Although the headline numbers may obscure this fact, the seasonally adjusted annual rate (SAAR) of housing starts across Canada saw a 3% increase in September, rising from 242,223 in August to 248,896 units. However, the six-month trend reported by CMHC, which smooths out monthly fluctuations, showed minimal change, settling at 250,411.
The market is primarily driven by multi-unit starts, which can fluctuate significantly from month to month. The number of homes currently under construction remains stable, with 371,617 units reported in urban centers of 50,000 or more in September, unchanged from August. Completions also experienced a slight decline of 0.9%, totaling 17,398 units.
The regional data presents a mixed picture. Among Canada’s four most populated provinces, only Quebec has experienced slight increases in housing starts for 2026. Notably, each of the seven major urban centers analyzed in the HSR has fallen behind the pace set in 2025 for new home construction. In Montreal, the six-month trend saw an 8% decline in September due to decreased multi-unit starts, while Vancouver experienced a 6% increase, driven by higher multi-unit starts. Toronto's trend remained unchanged, as the rise in multi-unit starts was offset by a decrease in single-detached units.
Looking ahead, CMHC is set to release data on October's housing starts on November 17.

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