CMHC forecasts extended pullback in condo construction through 2028

The CMHC expects new home construction to decline through 2028, with the slowdown being most pronounced in condominium development. Photo by Peter J. Thompson /Financial PostArticle contentCanada’s condominium market remains the most vulnerable segment of the housing system, as builders continue to pull back on new projects amid economic uncertainty, rising costs and weakening demand, according to the latest annual housing forecast from the Canada Mortgage and Housing Corporation (CMHC).Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentThe agency expects new home construction to decline through 2028, with the slowdown being most pronounced in condominium development. National housing starts are forecast to fall from 259,000 units in 2025 to 247,000 in 2026, before dropping further to 223,000 in 2027 and 216,000 by 2028 under the agency’s baseline outlook. Higher construction and financing costs, combined with slower population growth and softer buyer demand, are weighing on project viability, particularly in Canada’s largest urban centres.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.We apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Play VideoArticle contentArticle contentAt the national level, housing demand is expected to remain weak, with resale activity staying below historical averages and prices showing only modest gains after declining in 2025. Average resale prices are projected to increase from $698,000 in 2026 to $727,000 by 2028, according to CMHC. The agency says lingering geopolitical and trade uncertainty is keeping many buyers on the sidelines, particularly in higher-priced markets where affordability constraints remain acute.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentThat caution is being reinforced by a softer economic backdrop. Real GDP growth is forecast at just 0.7 per cent in 2026, while employment growth slows sharply to 0.3 per cent, down from 1.5 per cent in 2025. CMHC says those conditions will limit the pool of households able to absorb new condominium supply, even as borrowing costs stabilize.Article content“We expect Canada’s economy to grow slowly in 2026, as many households and businesses remain cautious because of geopolitical and trade uncertainty,” said CMHC deputy chief economist Kevin Hughes. “This caution is leading many households to delay buying homes and making builders more hesitant to start new projects.”Article contentArticle contentThe effects are expected to be felt most in Toronto and Vancouver, where condos have historically driven new supply. In Toronto, CMHC forecasts apartment starts (a proxy for condominium construction) to fall from more than 37,000 units in 2023 to roughly 16,000 to 19,000 units in 2026. At the same time, the agency expects Toronto’s rental vacancy rate to rise to about 3.5 per cent in 2026, up from 1.4 per cent in 2023, easing rent growth and weighing on the economics of new condo development.Article contentRead More 'Escape hatches are gone': Power of sale listings surge in Toronto Vancouver homes averaging 100 days on the market as inventory climbs Article contentIn Vancouver, CMHC forecasts apartment starts to fall from roughly 27,600 units in 2023 to about 17,000 to 21,000 units in 2026, reflecting weaker demand and elevated construction costs.Article contentDespite the pullback in construction, CMHC does not anticipate a sharp correction in home prices. Instead, the forecast predicts a fragile balance, where a multi-year slowdown in condo starts risks constraining supply if demand rebounds faster than construction activity later in the decade.Article content• Email: shcampbell@postmedia.com Article contentTrending John Manley: Why Canada needs to play it cool on CUSMA — and keep its options open Economy As Cuba fuel crisis deepens, Canadians on the ground remain in vacation mode News 'Escape hatches are gone': Power of sale listings surge in Toronto Real Estate Posthaste: Debt loads hit record as Canadians in financial distress pile loans on top of loans News Opinion: The rupture is here: Why Canada needs an economic security act like Japan's Economy Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. John Manley: Why Canada needs to play it cool on CUSMA — and keep its options open Economy As Cuba fuel crisis deepens, Canadians on the ground remain in vacation mode News 'Escape hatches are gone': Power of sale listings surge in Toronto Real Estate Posthaste: Debt loads hit record as Canadians in financial distress pile loans on top of loans News Opinion: The rupture is here: Why Canada needs an economic security act like Japan's Economy