Canada Still Has a Large Housing Supply Gap
CMHC's Fall 2026 Housing Supply Report estimates that Canada has an annual housing supply gap of between 187,000 and 238,000 homes over the next decade.
The gap represents the difference between the number of homes expected to be built under current trends and the number needed to return affordability to 2019 levels by 2036.
CMHC says the national supply gap is broadly unchanged from its previous assessment.
That means Canada still needs roughly twice as much housing construction as currently projected if it wants to make significant progress toward restoring pre-pandemic affordability.
Construction Could Slow at the Wrong Time
One of the biggest concerns identified by CMHC is the possibility that housing construction could weaken while demand eventually begins to recover.
Recent market conditions have provided some relief for buyers and renters, with slower population growth, more balanced rental markets and improved affordability in several areas.
However, CMHC warns that these improvements could be difficult to sustain if construction falls too far behind future demand.
Building too little during the current housing slowdown could leave Canada without enough homes when demand strengthens again.
Rental Construction Is Holding Up Better
Canada's housing construction landscape is changing.
Rental housing continues to account for a large share of new construction in several major markets. This has helped increase rental supply and provided some near-term relief for renters.
However, CMHC says the ownership segment is facing more serious challenges.
New condominium construction has weakened because of weaker demand and difficult project economics. Newly built condominium prices also remain significantly higher than comparable resale units in some markets.
Homeownership Supply Is Becoming a Bigger Concern
The shortage is increasingly concentrated in housing intended for ownership.
As condominium construction weakens and other ownership-oriented projects face financial challenges, fewer new homes are being added for Canadians looking to buy.
This could create another affordability challenge if demand for homeownership increases before enough new ownership housing is built.
For buyers, the issue is not simply how many homes exist today. It is whether enough homes will be built in the years ahead.
Toronto, Montréal and Ottawa Face Different Challenges
Housing conditions vary considerably across Canada.
CMHC says Toronto and Calgary have narrowed their housing supply gaps compared with its previous assessment, while Vancouver's gap has remained broadly unchanged.
The situation is more difficult in Montréal and Ottawa, where the housing supply gaps have widened.
Edmonton remains an exception among the major markets tracked by CMHC. The city currently does not have a housing supply gap and remains one of Canada's more affordable major housing markets.
Canada Needs Hundreds of Thousands More Homes
CMHC's national estimates show the scale of the challenge clearly.
The agency estimates that Canada needs around 417,000 to 469,000 housing starts every year to restore pre-pandemic affordability by 2036.
Under its business-as-usual scenario, annual housing starts would be much lower.
The difference creates an annual supply gap of between 187,000 and 238,000 homes.
Closing that gap would require a substantial increase in construction activity over the coming decade.
Why the Housing Shortage Matters
A persistent housing shortage can affect more than home prices.
Limited supply can make it harder for younger Canadians to enter the housing market, increase competition for available rental homes and make it more difficult for workers to move to cities where jobs are available.
Higher housing costs can also put pressure on household budgets and affect decisions around family formation, savings and long-term financial planning.
For Canada's economy, the availability of housing is increasingly connected to the ability to attract workers and support population growth.
What Could Happen to Canada's Housing Market?
The direction of construction will be one of the most important factors to watch.
If builders continue to reduce ownership-oriented projects while demand eventually strengthens, the housing supply gap could become more difficult to close.
On the other hand, stronger construction, faster project approvals and improved financial conditions could help Canada add the homes it needs.
CMHC's latest assessment makes clear that the challenge is not only about today's housing market. It is about building enough homes now to avoid another supply shortage later.
What Happens Next?
Canada's housing market is entering a period where construction levels will be particularly important.
Rental supply has improved in many markets, but ownership housing remains under pressure. At the same time, Canada still needs hundreds of thousands of additional homes each year to move affordability closer to pre-pandemic levels.
The next few years will determine whether construction can keep pace with future demand or whether today's housing shortage becomes an even bigger problem.
TwikUp Insight
Canada has made some progress on housing affordability, but CMHC's latest numbers show that the underlying supply challenge remains substantial.
The country needs up to 469,000 new homes every year to restore pre-pandemic affordability by 2036, while current construction projections remain well below that level.
The biggest concern is that ownership housing is weakening just as Canada needs more homes. If construction slows too much today, Canadians could face another affordability squeeze when demand returns.