Value of residential construction in Canada - Data and Analysis (1980-2032)

Residential construction value is forecast to fall 2.6% to $157.4 billion in 2026 amid an uneven economic backdrop and persistently high borrowing costs. Job growth remains soft, and after a series of interest-rate cuts that ended in late 2025, monetary policy has shifted to a holding pattern, leaving mortgage rates elevated as rising bond yields continue to pass through to lending rates. Canada's population has also begun to shrink, removing the immigration-fuelled demand that has long underpinned homebuilding. These conditions are limiting the strength of any housing rebound, raising the risk profile of new projects and weighing on builder sentiment. CMHC anticipates weaker housing demand in provinces including Ontario and British Columbia, where condominium construction has sunk to historically low levels.Even so, federal housing support provides some offset. Through the Build Communities Strong Fund, Ottawa is funding housing-related infrastructure, including wastewater systems, for municipalities that cut development charges, while Ontario is using its share to remove HST on new homes for a year. These measures temper the downturn.Residential construction value has fallen at a compound annual rate of 4.1% over the five years through 2026, unwinding a post-pandemic boom. Activity peaked in 2021, as historically low interest rates, remote-work trends that reshaped housing preferences and elevated household savings fuelled unprecedented demand. This boom proved unsustainable once the Bank of Canada began its aggressive tightening cycle. Rising mortgage rates eroded affordability and froze markets, and as rates climbed to their highest level in two decades, new housing investment collapsed, driving steep back-to-back annual declines.Activity has flatlined since 2023, with the market splitting along regional and product lines. Toronto has been hit hardest: condominium pre-construction sales collapsed and developers cancelled or delayed projects facing cost overruns, high development charges and time-consuming approval processes, pushing the city's housing starts to multi-decade lows. Vancouver has similarly struggled, though Prairie cities, including Calgary and Edmonton, have bucked the national trend with record-high starts supported by strong interprovincial migration and relatively affordable housing prices. Rental construction has kept the sector from sliding further. Government financing and incentives fuelled a second consecutive year of record purpose-built rental starts in 2025, offsetting the condo slump and lifting the value of residential construction slightly. Builders have pivoted away from presale-dependent condo towers toward rental projects backed by federal low-cost construction loans, and rentals now make up more than half of starts in Canada's urban centres.