Canada's Housing Market: A Nuanced Outlook Amidst Cooling Forecasts and Surprising Starts

Ah, the Canadian housing market – it always seems to keep us on our toes, doesn't it? The latest insights from the Canada Mortgage and Housing Corporation (CMHC) paint a rather intricate picture, a sort of balancing act between a cooling trend, some surprising construction momentum, and a cautious peek into the future.

According to CMHC's summer update for 2025, it looks like our housing market is indeed expected to continue its cool-down phase. We’re likely to see home prices dip by about 2% nationally throughout 2025, with those drops potentially feeling a bit more pronounced in the ever-pricier markets of Ontario and British Columbia. It makes sense, really; slower economic growth and, let's be honest, those high interest rates, are certainly putting a damper on demand. Folks are just being a little more careful, which is totally understandable.

Now, here's where it gets interesting, and perhaps a little counter-intuitive. While the forecasts point to cooling, the actual numbers for July 2025 tell a different story – at least in the short term. We saw Canada’s total monthly seasonally adjusted annual rate (SAAR) of housing starts hit a multi-year high, jumping 4% from June to a robust 294,085 units! And when you look at the first seven months of 2025, they’ve actually been stronger than the same period last year. This isn’t a contradiction, though; it’s more about timing. Much of this current surge, particularly in multi-unit projects across the Prairies and Quebec, reflects investment decisions made months, or even years, ago. There’s a pipeline of projects that just keeps moving forward, even as new decisions become more cautious.

Regionally, the story varies, as it always does across our vast country. Multi-unit construction, like apartment buildings and condos, is still incredibly strong, especially in Atlantic Canada, the Prairies, and Quebec. These areas are seeing quite a bit of activity, which is fantastic for increasing overall housing supply. However, low-rise construction, you know, the single-family homes and townhouses, faces more headwinds. Ontario, in particular, seems to be struggling a bit on that front, though Quebec, Manitoba, and Alberta are showing some modest gains. Interestingly, semi-detached and row housing are proving pretty resilient in places like British Columbia.

Even our rental markets are expected to ease up a bit, gradually, throughout the forecast period. It's a combination of new supply coming online and that softening demand we talked about earlier. So, perhaps a little relief for renters down the line, which would be a welcome change for many.

Looking ahead to 2026 and even 2027-2028, CMHC anticipates a gradual improvement. While 2026 might still see some declining home prices and lower housing starts due to weak demand and high costs, things are expected to stabilize and then grow modestly afterwards. Very slow population growth and limited income gains mean we probably won't see massive price increases. Developers, quite rightly, are expected to remain cautious, which will mean housing starts could continue to fall through 2026-2028, even with some ongoing rental construction projects easing from their 2025 peaks.

So, what's the takeaway? Canada's housing market is complex, undergoing a necessary correction with a forecasted cool-down in prices and demand. Yet, the current strong housing starts data, particularly in multi-unit dwellings, reminds us that the market moves in cycles, often reflecting past commitments. It’s a dynamic period, certainly, but one that CMHC suggests will eventually find its footing and move towards a more balanced, albeit slow, recovery.