Federal Government Reaffirms Commitment to Double Homebuilding Pace Amid Construction Challenges

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The federal Liberal government maintains its promise to double housing construction despite industry challenges, with new reports highlighting both progress and obstacles.

OTTAWA — The federal Liberal government is reaffirming its commitment to significantly increase the pace of homebuilding, despite facing challenges that have impacted the construction industry. Prime Minister Mark Carney, as part of his 2025 election platform, pledged to double the pace of housing construction over the next decade as a means to alleviate the rising costs of rent and home ownership. However, the commitment has recently come under scrutiny. Parliamentary Budget Officer Annette Ryan pointed out in a report dated May 4 that, although this promise was reiterated in the 2025 budget presented last fall, it was notably absent from the spring economic update released at the end of April. Ryan expressed concerns regarding the lack of clear metrics or targets to monitor the pace of homebuilding, especially given the substantial financial commitments made by the government aimed at accelerating capital projects, including housing construction.
In response to inquiries from The Canadian Press, Mohammad Hussain, spokesperson for Housing Minister Gregor Robertson, confirmed that the government remains dedicated to its goal of doubling home construction in Canada. Hussain highlighted the initiatives underway, such as the launch of Build Canada Homes and the Build Communities Strong Fund, along with a reduction in the Goods and Services Tax (GST) for new homebuyers as part of their strategy to meet this ambitious target.
Despite these efforts, Ryan's report indicated a concerning trend; the pace of housing starts has been declining, losing momentum since September 2025. She noted that while the total number of housing starts was bolstered earlier in the year by a surge in rental construction, the six-month trend has been on a downward trajectory. The Parliamentary Budget Officer also referenced an earlier estimate suggesting that the new affordable housing agency, Build Canada Homes, is anticipated to contribute approximately 26,000 new housing units over a span of five years, a figure that falls short of the necessary pace of construction to meet the government's goals.
Nonetheless, recent data from the Canada Mortgage and Housing Corporation (CMHC) indicates that Canadian homebuilders have managed to halt the decline in housing starts, at least for the time being. The CMHC's report revealed a 3.2 percent increase in the six-month trend of annual housing starts, reaching a total of 256,777 in April. However, projections from the CMHC suggest that economic slowdowns may lead to a decrease in new homebuilding, with estimates indicating a drop to 216,000 starts by 2028.
In reaction to the PBO's findings, Conservative housing critic Scott Aitchison criticized the Liberal government's slow progress on housing construction and their failure to address cost reductions effectively. The Conservative Party is advocating for an expansion of the Liberal policy to cut the GST on homes priced under $1.3 million, in addition to proposing the elimination of capital gains taxes on reinvested housing.
Marc Desormeaux, vice-president of policy and economist at the Business Council of Canada, pointed out that the narrative surrounding sluggish homebuilding in Canada should focus on specific regions, particularly Ontario. He mentioned that outside of Ontario, housing construction has reached its fastest pace in 2025, according to records dating back to 1955. Desormeaux attributed last year’s construction momentum to government incentives, including tax cuts and regulatory adjustments aimed at reducing building costs. However, he noted that Ontario, particularly Toronto, is facing challenges due to a surplus of unsold condominiums, which dampens housing activity.
Desormeaux also warned that the ongoing conflict in Iran could elevate borrowing and building costs, complicating construction conditions in the near future. He raised concerns that the federal government's ambitious infrastructure agenda might divert essential labor resources away from homebuilding. Without new construction projects in the pipeline, Desormeaux anticipates a supply shortage in Ontario towards the end of the decade, as population growth stabilizes, which could hinder efforts to improve housing affordability in the medium term.
Despite these challenges, Desormeaux expressed support for the federal government's ambitious housing targets, as they could motivate builders and provincial governments to innovate and enhance supply. He emphasized that the federal government has the capacity to influence the private sector and other governmental levels, particularly during economic downturns. "Setting these ambitious goals is partly about sustaining momentum," he stated.
Hussain reiterated that the federal government is collaborating with private sector partners, non-profit organizations, other levels of government, and Indigenous communities to fulfill its housing agenda, underlining the multifaceted approach required to tackle the ongoing housing crisis in Canada.

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