Ottawa still pledging to double construction pace despite home building headwinds

Realtor Tom Storey talks about how the Bank of Canada holding its key policy interest rate at 2.25 per cent impacts the housing market.

OTTAWA — The federal Liberal government is sticking to its pledge to double the pace of home building even as headwinds buffet the construction industry.

Prime Minister Mark Carney promised in his 2025 election platform to make investments that would double the pace of housing construction over the next decade to drive down the costs of rent and home ownership.

Parliamentary Budget Officer Annette Ryan flagged in a May 4 report that the promise was repeated in Budget 2025 last fall but was conspicuously absent from Ottawa’s spring economic update tabled at the end of April.

“While affordability and support for the housing supply were prominently profiled, no specific targets or metrics for the pace of home building were provided,” she wrote.

Since taking on the fiscal watchdog role late last month, Ryan has raised general concerns about a lack of clear benchmarks for tracking federal spending priorities — particularly as the Liberals commit billions of dollars to speed up capital projects, such as housing construction.

Mohammad Hussain, spokesperson for Housing Minister Gregor Robertson, reaffirmed the pledge when asked by The Canadian Press on Friday whether the federal government was still aiming to double the pace of home construction in Canada.

“Through our housing and infrastructure measures, including the launch of Build Canada Homes and the Build Communities Strong Fund, as well as cutting the GST for new homebuyers, we are working toward doubling home building over the next decade,” he said.

Ryan also noted that, since the fall budget was tabled in November, the pace of housing starts in Canada has “continued to lose momentum.”

“While total starts in 2025 were elevated earlier in the year by strong rental construction, the six‑month trend in housing starts has been declining since September 2025,” the May report said.

The PBO also cited a previous estimate that the Liberals’ new affordable housing agency, Build Canada Homes, will add roughly 26,000 units over five years, “which would be insufficient to achieve the previously targeted pace of home building.”

Canadian homebuilders have stopped that slide in housing starts, at least briefly. The Canada Mortgage and Housing Corp. reported Friday that the six-month trend in annual housing starts increased 3.2 per cent to 256,777 in April.

The CMHC projected in its 2026 housing outlook that a slow economy would drive a decline in new home building over the next three years, falling to 216,000 starts in 2028.

Conservative housing critic Scott Aitchison said in response to the PBO’s report earlier this month that the Liberals are moving too slowly on home construction and failing to cut costs where it matters.

The Conservatives want to broaden a Liberal policy to cut the GST on all homes valued under $1.3 million and also propose waiving capital gains on housing reinvestment.

The story about sluggish home building in Canada actually should focus on one province in particular, said Marc Desormeaux, vice-president of policy and economist at the Business Council of Canada.

Desormeaux said in a report Friday that, outside Ontario, housing construction in Canada hit its fastest-ever pace in 2025, based on records dating back to 1955.

“If you look at the big picture, home building has been exceptionally strong except for a few parts of the country,” he said in an interview.

Desormeaux chalked some of last year’s construction momentum up to government incentives, including tax cuts and regulatory changes to lower the cost of building.

Ontario stands out largely because of Toronto, where a glut of unsold condo inventory is putting a damper on housing activity in the city. Slowing population growth is also throttling demand, limiting price appreciation and, by extension, weakening the business case for builders to break ground on new units.

Desormeaux said construction conditions might not improve in the months ahead, as the Iran war pushes borrowing and building costs higher. The ambitious federal infrastructure agenda could also pull scarce labour away from home building, he warned.

Without new builds in the pipeline, Desormeaux foresees a supply crunch coming for Ontario toward the end of the decade, when population growth is expected to normalize. That will ultimately undermine efforts to restore affordability in the medium term, he argued.

Even outside Ontario, Desormeaux said, the level of home building is not where it needs to be to restore affordability.

“The depth of this challenge is huge,” he said. “Even with the boom that we’ve experienced across most of the country, we’re not quite there yet, or at the very least it will take a long time at very high levels to get to where we need to be.”

Despite the headwinds facing the sector, Desormeaux said the Business Council of Canada supports the federal government’s lofty targets because they can push builders and provinces to think outside the box to ramp up supply.

He said Ottawa has the ability to set the tone for the private sector or other levels of government, particularly when cyclical market slowdowns arrive.

“Setting these ambitious goals is partly about sustaining momentum,” he said.

Hussain said Ottawa is leaning on partners in the private sector, non-profits, other levels of government and Indigenous communities to execute its housing agenda.

This report by The Canadian Press was first published May 18, 2026.

Craig Lord, The Canadian Press