‘Seeing a little bit of that pessimism’: CMHC economist on fall housing supply report

Tania Bourassa-Ochoa, deputy chief economist at Canada Mortgage and Housing Corporation (CMHC), joins BNN Bloomberg to discuss their latest housing supply report.

With an increase in housing starts in select markets but lower activity in major urban centres, an economist says overall developer sentiment is pessimistic due to economic uncertainty and inflationary pressures.

The Canada Mortgage and Housing Corporation (CMHC) released its fall housing supply report stating growth in overall housing starts was flat during the first half of the year compared with 2024.

“We’re seeing a little bit of that pessimism show up quite significantly,” Tania Bourassa-Ochoa, deputy chief economist for CMHC told BNN Bloomberg in a Tuesday interview. “A lot of that is due to the current economic uncertainty, the trade situation, inflationary pressures, especially when we’re thinking about the construction materials as well that could be impacted due to the tariff situation.”

Calgary, Edmonton and Ottawa reported gains. However, combined housing starts are offset by declines in Toronto, Vancouver and Halifax. Nationally, condominium apartment starts declined in most key markets as slower presales led to project delays and cancellations.

Purpose-built rental starts, meanwhile, surged, bolstered by government support and a shift among developers toward the rental market.

“One of the main reasons is because there’s been concerted efforts from all levels of government in the last few years to really push some new programs that could be funding, that could be looking at regulation, for example,” said Bourassa-Ochoa. “There’s a lot of efforts that are being deployed in order to push more of that purpose-built rental construction.”

Toronto on track to its lowest level of housing starts in 30 years

The CMHC says homebuilding activity in Toronto fell to its lowest point since 1996 on a per-capita basis, mainly due to a 60 per cent drop in condominium starts. They said the decline is on track for its lowest level of housing starts in 30 years.

“The condo market is really in a correction mode right now, the main reason being that we saw actually a big fluctuation in demand for condominiums,” said Bourassa-Ochoa. “We saw a big increase in demand during the pandemic. Interest rates were low. Now the environment has shifted quite a bit, and so we’re seeing this demand come down quite significantly.”

She said investors are not attracted to the condo space for profit as immigration trends are down and interest rates remain high on mortgages.

She said people with presales on condos are, in some cases, not able to obtain financing as developers delay launches and scale back land acquisitions. Only a marginal recovery is expected in 2026 and 2027, keeping construction activity well below historical levels.

Montreal housing starts to modestly grow in 2026

Housing starts increased in Montreal in the first half of 2025. The city is expected to outperform with a recovery this year led by strong purpose-built rental construction. While further growth isn’t anticipated, current momentum is expected to be sustained.

“What’s driving the show is really purpose-built rental construction,” said Bourassa-Ochoa.

Housing supply from the resale market has remained stable. Despite an increase in new listings, growth in sales has kept active listings flat. The condo market has slowed down, with units under construction at the lowest level in 15 years. While demand in the downtown Montreal core weakened, construction activity became more concentrated in the suburbs where developers saw new opportunities for developments.

Vancouver expected to be weaker before improving in 2026

Vancouver saw a decline in housing starts, as well, during the first half of the year compared with 2024. The CMHC said starts are expected to be weaker this year before gradually improving in 2026 as economic conditions improve.

“The situation in Vancouver looks a little bit brighter when we’re forward looking,” said Bourassa-Ochoa. “It’s not as (gloomy) as the Toronto story. We are expecting to see these lower housing starts in 2025. That is true across the country, actually, but we are anticipating a little bit of a pickup in market conditions that should help pick up a little bit of these housing starts in that region.”

The province and city are amending zoning policies and development cost timelines to accelerate housing delivery. The changes are aimed at increasing housing supply by reducing the risk and upfront costs for developers.

With files from the Canadian Press