Canada’s residential construction sector continued to experience a gradual downward pressure heading into the final stretch of the year, as the latest data from the national housing agency reveals a persistent cooling in housing starts. Even though the monthly pace of new construction remained largely unchanged on a headline basis, the broader multi-month trajectory for Canada’s housing starts continued to trend lower in August, reflecting ongoing market adjustments and shifting economic conditions.
According to the latest figures released by the Canada Mortgage and Housing Corporation (CMHC), the six-month trend in housing starts fell 1.3 per cent from July, bringing the annualized figure down to 244,149 units in August. This critical metric serves as a smoothed, six-month moving average of the seasonally adjusted annual rate (SAAR) of housing starts across the country, offering economists and policymakers a reliable gauge of the medium-term direction of the residential construction industry.
While the broader six-month trend pointed downward, the monthly SAAR itself remained essentially flat. In August, the monthly annualized rate hovered at 229,046 units, showing almost no meaningful variation compared with the revised 229,360 units recorded in July. This stability in the short-term monthly pace, however, masks deeper regional divergences and a broader year-to-date contraction that continues to weigh on Canada’s overall housing supply outlook.
Actual Starts Down Four Per Cent Year to Date
Looking beyond annualized and seasonally adjusted projections, actual housing activity tells a similar story of moderation. Actual housing starts in urban centres with populations of 10,000 or more registered a two per cent decline on a year-over-year basis. Specifically, builders broke ground on 17,691 units across these larger communities in August, compared with 18,112 units during the same month a year earlier.
The contraction is even more pronounced when examining the broader cumulative performance of the sector throughout the year. Through the first eight months of the year, a total of 149,542 residential units were started across the country. This represents a four per cent decrease compared with the corresponding eight-month period in the previous year, highlighting a persistent slowdown in the initiation of new residential projects as developers navigate financing costs, market demand, and economic headwinds.
Kevin Hughes, deputy chief economist at the CMHC, provided further context regarding the geographic dynamics driving the national numbers.
"Housing starts continued to trend slightly down in August, as modest gains in Quebec and Alberta only partially offset the decline in other provinces, most notably, Ontario," Hughes explained.
The heavy concentration of declines in Ontario—traditionally the engine of Canada’s housing market—has exerted significant downward pressure on the national aggregates. Meanwhile, localized increases in provinces like Quebec and Alberta have provided a partial cushion, though not enough to reverse the broader national trajectory.
Hughes also noted that the current batch of housing statistics aligns closely with the projections outlined in the agency’s broader forecasting publications.
"The latest results are consistent with CMHC’s Housing Market Outlook," Hughes added. "While the current pace of starts is elevated compared to recent years, we expect the downward trend to continue as construction activity moderates in the coming months especially towards the end of the year."
Montreal, Vancouver Trends Rise
Beneath the national aggregates, a closer examination of Canada’s largest urban centres reveals contrasting local real estate and construction dynamics. Among Canada’s three largest census metropolitan areas, two major hubs bucked the national downward trend and recorded notable increases in their six-month housing starts trends, while the third remained completely flat.
In Montreal, the six-month trend for housing starts rose by six per cent on a month-over-month basis. This urban acceleration was broadly based, driven by higher starts across a variety of housing types, indicating healthy builder confidence and continued demand within Quebec’s largest metropolitan market.
Similarly, Vancouver recorded a matching six per cent increase in its six-month housing starts trend. In Canada’s westernmost major metropolis, the upward movement was primarily fuelled by a surge in multi-unit construction, reflecting the ongoing regional demand for higher-density housing formats such as condominiums and townhomes to accommodate growing urban populations.
Toronto presented a different picture entirely. Canada’s largest housing market saw its six-month trend remain completely unchanged from the previous month. Both single-detached and multi-unit starts in the Toronto census metropolitan area held flat, demonstrating a period of consolidation and steadying activity following previous fluctuations in regional development pipelines.
In tandem with the starts data, the CMHC report provided insights into the broader pipeline of residential development. The total number of homes actively under construction in Canadian centres with populations of 50,000 or more edged down by 0.4 per cent from July, settling at 371,658 units. While this figure remains high, reflecting the massive volume of multi-year residential projects currently making their way through the construction phase, the slight contraction points to a maturing pipeline.
Meanwhile, completed homes experienced a much sharper downward correction during the month. Housing completions declined by 11.2 per cent month over month, dropping to 17,550 units as projects reached their final stages of delivery.
At the same time, the preliminary planning pipeline showed signs of cautious preparation. The number of residential units that had received approved building permits—signalling that municipalities have greenlit the projects—but where physical construction had not yet commenced, ticked up by 0.7 per cent to reach 142,423 units. This reserve of approved-but-unstarted projects suggests that while builders hold the necessary regulatory permissions to proceed, many are closely monitoring market conditions, financing environments, and consumer demand before committing capital to break ground.