There’s no place in Canada where homebuilding is as depressed as it is in Toronto. That reality was underscored earlier today when Canada Mortgage and Housing Corporation (CMHC) released its fall housing supply report, which shows that building activity plunged 44% in the first half of 2025 compared to the same period in 2024. On a population-adjusted basis, the federal housing agency said that starts are at the lowest level since 1996 — putting them a hair shy of a 30-year low.
The overall downtrend was driven by a 60% drop in condominium starts, and reflects a pullback in investor demand as cancellations and delays continue to characterize the market.
“With 70% pre-construction sales required, record low sales limited the ability of condominium developers to secure the financing needed to break ground on new projects,” CMHC said. “Industry sources suggest investors were the main buyers of pre-construction condominiums in recent years before they became increasingly discouraged by reduced profitability. Consequently, condominium starts fell the most in the urban core, where investors have been most active.”
CMHC’s latest findings, while bleak, are not surprising. Toronto-based provider of real estate analytics Urbanation reported this past July that unsold inventory across all stages of development struck a record high in the Greater Toronto Area in the second quarter of 2025, with 24,045 units available on the market. This happened as sales all but ground to a halt, “continuing to break 30-year lows,” with a 69% year-over-year decline.
The firm also reported that just three projects, totalling 891 units, launched presales in the quarter, while four condo projects, totalling 719 units, were cancelled, “bringing the total since the start of 2024 to 21 projects and 4,412 units cancelled.” Third-quarter statistics from Urbanation are due out next month.
Meanwhile, CMHC revealed on Tuesday that rental starts in Toronto, although in better shape than condo starts, slipped 8% over the first six months of 2024. “In the long-term, the slowdown in construction of all housing types could put further pressure on affordability when economic conditions improve and demand ramps up again,” it added.
The report notes that rental market viability is being driven by the availability of CMHC financing tools, and the fact that land prices have come down 30% from their 2021 peak. As such, nine GTA condo projects that had already launched presales have been converted to rental since 2024, including three projects cancelled in the second quarter of 2025, according to Urbanation’s previously mentioned report.
“Weakness in Toronto’s new construction market isn’t expected to reverse over the short-term, with annual housing starts through 2027 expected to be well below what’s required to restore affordability to pre-pandemic levels by 2035,” CMHC said. “This threatens affordability and presents the prospect of less economic activity, outmigration, a higher incidence of homelessness and forgone tax revenue.”
With that all said, CMHC reports that national housing starts as a whole came in “just a few units below 2024’s level and near all-time highs” in the first six months of 2025. Broadly speaking, gains in Calgary, Edmonton, Montreal, and Ottawa compensated for declines in Toronto, Vancouver, and Halifax. More specifically, here are some of the trends the agency has highlighted:
- Condo starts were down dramatically in Toronto, Vancouver, Montreal, and Halifax, but not in Edmonton and Ottawa, and to a lesser degree in Calgary. One reason for this is because project sizes were generally smaller in the latter regions, which made it easier for builders to meet presale thresholds and secure financing, in spite of softer investor demand.
- Across all seven census metropolitan areas, ground-oriented starts — including single-family homes, duplexes, townhouses, and stacked townhouses — saw a modest 5% rise, with stronger recovery observed in more affordable markets like Calgary, Edmonton, and Montreal. This was indicative of more favourable “move-up activity” in these markets.
- Across all seven CMAs, there will be varying levels of recovery. Starts in Vancouver are anticipated to see “gradual recovery” by 2027, with building activity closer to its 10-year average; Montreal is on track to sustain its current momentum over the next few years, due to strong purpose-built rental construction; and Edmonton and Calgary are expected to “record-high starts” through this year, but “some moderation” in 2026 amid normalizing building activity.