Canada’s building boom is slowing, but still very much alive–even without population growth. Canada Mortgage and Housing Corporation (CMHC) data shows housing starts slipped in June. BMO Capital Markets wrote to investors, explaining volumes of new housing aren’t a concern. However, they note Canada is building a “nation of rentals,” as most new units will be for purpose-built rentals (not homeowners) for the first time ever.
Canadian Housing Starts Dip For 3rd Month
The monthly seasonally adjusted annual rate of housing starts for all areas fell 6% to 239k units in June. It marks the third consecutive drop, but the volume is still significantly higher than usual. That’s on top of the 375k units currently under construction after climbing 0.2% higher. There’s a lot of supply in the pipeline.
BMO notes the 12-month average for housing starts sits at roughly 256k units. That’s a volume they consider healthy, though it still presents a challenge Canada has never dealt with before.
“The most noteworthy story in Canadian homebuilding is the ongoing, and widening, split between construction of homes for ownership, and those for rental,” explains BMO senior economist Robert Kavcic.
Canada’s Supply Shift: Building A Nation of Renters
Source: BMO Capital Markets.
Housing starts might be lofty, but Canadian builders have shifted from homes for sale to rentals. Unadjusted data shows that most (58.2%) of the 64.6k units started between January and April 2026 are for the rental market. It’s an unusual dynamic for the country, with the construction of units for ownership making a recession-like drop.
“Across major CMAs, combined housing starts of condominiums and for homeownership have now fallen to the lowest level since the 2009 recession, and the mid-1990s recession before that; while rental starts continue to run near record highs,” explains Kavcic.
Kavcic sees this as an extension of the boom and bust, and directly related to the collapse of pre-sales of new homes. “This reflects a very quiet new home sales market, where projects are not breaking ground without presales; and the legacy of past rental market tightness and incentives,” notes Kavcic.
BMO doesn’t elaborate further, but it’s easy to misread this by tying it to previous recessions. Demand for new homes naturally falls in a worsening economy, but it’s not typical for the dynamic to outright reverse.
The country has never seen this flip before, as a weak economy also means falling rents. However, policymakers have shifted incentives from end users to investors and large institutions. We highlighted this issue last year, as Canada’s policy shift moved towards trying to save its housing bubble by creating a rental bubble.
Question – where is the financing coming from for the apartment development? Is it domestic or offshore.
In my CMA – Abbotsford -Mission population of 195,000 (2021) in the last two years according to the CMA there have been 1,556 apartments either under construction or completed for the years 2025 and 2026.
Us? The CMHC is subsidizing the loans and giving them up to 55 year terms—longer than the actual lifespan of the buildings is my understanding. When a country does this, it presents long term stability questions about the currency, because the issuer itself is now proceeding with moral hazard.
The “nation of renters” is not new.