Housing Starts and Housing Supply in Canada: Why It’s Getting Harder to Find a Home

Canada’s housing crisis is no longer a distant warning bell—it’s loud, clear, and hitting home for millions. At the heart of this issue? A deepening gap between how many homes we’re building (housing starts) and how many homes Canadians actually need. Whether you’re trying to buy your first home or make sense of skyrocketing rents, the supply side of the market is where it all begins.

Let’s unpack the state of housing starts in Canada, what’s causing the shortfall, and how it’s reshaping the housing landscape for 2025 and beyond.

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What Are Housing Starts?

Housing starts refer to the beginning phase of construction on new residential buildings. The Canada Mortgage and Housing Corporation (CMHC) tracks this data closely—it’s one of the key indicators of housing market health. In short: when builders pour the foundation, it counts as a start.

A Volatile History

From 1977 to 2023, Canada averaged about 191,000 new housing starts per year. But in March 2021, starts spiked to 321,000—mostly driven by post-pandemic recovery and pent-up demand. By contrast, the lowest on record was just 90,000 back in August 1982, during a severe recession.

Now, with immigration targets set at 500,000 new Canadians annually, we’re not even close to building enough homes to keep up.

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What’s Driving the Shortfall in New Builds?

A mix of economic, political, and logistical challenges are slowing down the pace of new construction across Canada.

1. Soaring Construction Costs

From labour shortages to pricier materials, developers are facing higher-than-ever build costs. That makes launching new projects riskier—especially in cities with tight profit margins.

2. Population Growth & Immigration

Canada’s population is growing at record speed. But housing supply hasn’t kept pace. Many cities, especially Toronto, Vancouver, and Montreal, are seeing a wave of newcomers—without the homes to house them.

3. Zoning & Regulation Bottlenecks

Red tape at the municipal level is also a major hurdle. Zoning restrictions, NIMBYism (“not in my backyard” resistance), and delays in development approvals have all made it harder for builders to get shovels in the ground quickly.

4. Interest Rate Sensitivity

Higher borrowing costs make financing new builds harder—for both buyers and builders. Even if the Bank of Canada holds rates steady in 2025, the memory of recent hikes is still impacting developer confidence.

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Housing Starts vs. Supply: Why the Gap Matters

Just because we start building homes doesn’t mean we’re keeping up with demand. Supply isn’t just about what’s being built now—it includes what’s available, what’s livable, and what people can actually afford.

A National Shortfall

According to CMHC, Canada needs an additional 3.5 million housing units by 2030 just to restore affordability. While provinces like Alberta and Quebec are doing slightly better, big gaps remain in Ontario and British Columbia.

Affordability at Risk

Limited housing supply means higher prices and fewer options. First-time buyers are especially affected, often pushed into bidding wars or forced to rent longer. Meanwhile, renters are seeing prices rise due to landlords capitalizing on tight markets.

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What Needs to Change? Solutions in Motion

Tackling the housing shortage requires coordination from every level of government and the private sector. Here’s what’s being proposed—and what’s still missing.

1. Federal Incentives for Developers

Ottawa has rolled out low-interest loans and funding for purpose-built rentals and affordable housing. But critics say these incentives aren’t enough without local cooperation.

2. Streamlined Zoning & Approvals

Some cities are rethinking zoning rules—like legalizing laneway housing, multiplexes, or eliminating minimum parking requirements. This opens the door to more units in already-developed neighbourhoods.

3. Modular & Prefab Construction

Faster building techniques like modular construction could reduce timelines and costs. Several pilot projects are already underway in BC and Ontario.

4. Supporting the Skilled Trades

One major roadblock is labour. With many tradespeople retiring, there’s an urgent need to train and retain a new generation of carpenters, plumbers, electricians, and site managers.

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What to Expect in the 2025 Housing Market

While fears of a housing crash have subsided, don’t expect affordability to bounce back overnight. CMHC expects moderate construction activity through 2025, with housing starts stabilizing near 210,000 units annually—far below what’s needed.

Interest rates are holding steady for now, which could encourage more sellers to list, easing some pressure. But unless the pace of new builds accelerates significantly, the supply crunch is likely to persist.

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FAQs: Quick Answers to Big Questions

Q: Is there really a housing shortage in Canada?
Yes. Demand has outpaced supply for years, and we’re not building fast enough to close the gap.

Q: Will homes become affordable again?
Affordability can improve, but only with major policy shifts and sustained construction. Without action, prices will likely remain elevated.

Q: Should I buy now or wait?
If interest rates remain steady, 2025 could be a reasonable time to buy—especially if you plan to stay long-term and lock in a good rate.

“For a deeper look at how supply delays are tightening the market, check out our updated report on why it’s getting harder to find a home in Canada.”

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Final Thoughts

The housing crisis isn’t just about price tags—it’s about supply, infrastructure, and political will. With more Canadians arriving every year and fewer homes being built, action can’t wait.

If you’re feeling squeezed by the current market, you’re not alone. But solutions are on the horizon—and staying informed is your best first step.