A construction worker is pictured working on a housing development in Brampton, Ont., on July 12, 2022. Photo Credit: CBC News
Canada’s housing market showed surprising momentum in September, with new home construction jumping 14% from August, according to fresh data from the Canada Mortgage and Housing Corporation (CMHC).
The national housing agency said the seasonally adjusted annualized rate of housing starts reached 279,234 units in September, up from 244,543 units in August. Economists had projected a smaller increase, expecting around 255,000 units.
Strong Gains Across Key Provinces
The rise was largely driven by a surge in construction activity across Ontario, Quebec, and the Prairie provinces. CMHC’s deputy chief economist, Tania Bourassa-Ochoa, said the increase lifted the six-month trend in housing starts nationwide.
“Montreal and Toronto together accounted for more than a quarter of all new housing starts in September,” Bourassa-Ochoa explained. “Much of this growth came from the construction of new rental apartments, which remain in high demand.”
She added that while the latest figures show resilience in the housing sector, they also reflect decisions made during stronger periods of investor confidence. “The current level of housing starts is mostly tied to earlier commitments, made months or even years ago, when market optimism was higher,” she said.
Urban Centres Lead the Way
The data revealed that housing starts in Canadian cities with populations over 10,000 climbed 16%, reaching an annualized rate of 254,345 units, up from 219,408 units in August. The pace of rural housing starts was estimated at 24,889 units.
The increase highlights the continued push for new supply, especially in urban markets where demand for rental housing remains intense. Developers have increasingly focused on purpose-built rentals amid limited resale inventory and record-high population growth.
Signs of Strength Despite Market Strain
Despite ongoing challenges in the broader real estate market — including high interest rates and cooling resale activity — September’s numbers indicate that the construction sector is holding steady.
Robert Kavcic, senior economist at BMO, described the latest figures as proof of “continued resilience despite tough resale conditions.”
He noted that housing starts have averaged 256,000 units over the past 12 months, a recovery from the slower pace recorded earlier in 2024. However, Kavcic pointed out that Ontario’s performance has been comparatively weak.
“Starts in Ontario have averaged 63,000 over the past year — the lowest level in a decade,” he said. “The rental segment continues to dominate construction activity, now outpacing both ownership and condominium projects combined.”
Rental Market Drives New Home Construction
The ongoing surge in rental housing development comes as affordability pressures continue to reshape Canada’s housing landscape. With mortgage costs rising and ownership increasingly out of reach for many, demand for rentals has intensified in major cities.
Industry experts suggest that this shift toward rental construction could help ease some pressure in the housing market over time, but warn that long-term challenges remain.
Even as construction ramps up, developers are facing higher financing costs, labour shortages, and slower permitting processes — factors that could limit how quickly new supply reaches the market.
Outlook
While the September surge offers a positive signal for Canada’s housing supply, economists caution that the underlying conditions remain uncertain. Rising costs, tighter lending standards, and economic headwinds could temper future growth.
Still, for now, the data paints a hopeful picture: Canada’s homebuilders are pressing ahead, with new projects breaking ground despite the hurdles — a sign of cautious optimism in a market under pressure.
