Canada’s housing affordability problem may have eased slightly in some markets, but the country is still nowhere close to building enough homes for the next decade.
According to the latest Fall 2026 Housing Supply Report from Canada Mortgage and Housing Corporation (CMHC), Canada needs approximately 417,000 to 469,000 housing starts every year to bring housing affordability back toward 2019, pre-pandemic levels by 2036.
At the current pace, however, CMHC projects only about:
231,000 homes per year
over the next decade.
That means Canada may need close to twice the amount of housing currently expected to be built. Over ten years, the upper end of CMHC’s estimate works out to roughly 4.69 million new homes.
The bigger concern?
Construction isn’t accelerating toward that target.
It may actually slow down.
Affordability Has Improved — But CMHC Says the Gains Could Be Fragile
There has been some improvement in Canadian housing affordability.
Home prices have softened in several markets, rent growth has slowed, and slower population growth has reduced some of the immediate pressure on housing demand.
But CMHC warns that these gains may not last if housing construction falls too far during the current softer market.
CMHC Deputy Chief Economist Aled ab Iorwerth highlighted the key risk: construction is slowing faster than demand, which could leave Canada short of housing again when demand strengthens.
This creates an unusual situation.
Today, buyers may see more listings, greater negotiating power and lower prices than during the peak market.
But at the same time, fewer projects are starting construction.
That means today’s softer market could eventually create tomorrow’s supply problem.
Canada Still Faces an Annual Gap of Up to 238,000 Homes
CMHC’s business-as-usual forecast expects roughly:
231,000 housing starts per year
But restoring 2019 affordability would require:
417,000 to 469,000 per year
That leaves an annual gap of roughly:
187,000 to 238,000 additional homes.
CMHC’s national supply gap has not changed dramatically from its 2025 estimate, even though the situation differs significantly from one city to another.
Calgary has made substantial progress because of strong construction.
Edmonton is currently the only major market in CMHC’s analysis without a housing supply gap.
Toronto’s gap has also narrowed — but the reason is very different.
Toronto’s Housing Gap Has Narrowed — But Not Because We Built Enough
At first glance, this sounds positive:
Toronto’s estimated housing supply gap has improved.
However, CMHC says much of that improvement came from lower home prices and slower rent growth, rather than a major increase in new housing construction.
In other words:
Toronto became somewhat more affordable because the market weakened — not because enough new homes were built.
That distinction matters.
CMHC estimates Toronto is currently on track for approximately:
42,000 housing starts per year
But restoring affordability to 2019 levels would require around:
62,000 to 68,000 starts annually.
Toronto therefore needs roughly:
20,000 to 26,000 more homes every year
above the current expected pace.
CMHC describes this as the need for at least a 50% increase in annual housing starts over the next decade.
And Toronto Construction Is Moving in the Wrong Direction
The difficulty is that Toronto doesn’t simply need to maintain construction.
It needs to dramatically increase it.
Yet CMHC reports that population-adjusted Toronto housing starts in the first half of 2026 were among the lowest since the mid-1990s.
The number of permitted units waiting to begin construction has also fallen approximately 50% from its 2023 peak, while condominium project launches have largely stalled.
This means the GTA could face a delayed supply problem.
A project that does not launch in 2026 is not just a missing construction site today.
It may also mean:
fewer completed homes available in 2029, 2030 or later.
Toronto’s Condo Construction Slowdown Is Especially Dramatic
The condominium market provides one of the clearest examples.
According to CMHC, only:
156 condominium units
started construction in the City of Toronto during the first half of 2026.
For comparison, the previous decade averaged roughly:
7,000 condo starts per year.
Why such a dramatic slowdown?
Weak pre-construction sales, reduced investor participation, high construction costs, difficult financing conditions and elevated resale condo inventory have all made developers more cautious about launching new projects.
This is important because Toronto has historically relied heavily on condominium development to create new ownership housing.
If very few projects begin today, the number of newly completed condos available to buyers several years from now will also decline.
Freehold Housing Isn’t Filling the Gap Either
The problem isn’t limited to condos.
CMHC also reports that ground-oriented freehold housing starts are at record-low levels after more than two decades of decline.
That includes the types of homes many GTA families ultimately want:
Detached homes.
Semi-detached homes.
Townhouses and other ground-oriented ownership options.
So Toronto’s long-term supply challenge is increasingly becoming an ownership-housing problem.
There may be more rental construction.
But there are not necessarily more homes being built for people who want to buy.
Rental Construction Is Booming — But That Doesn’t Solve Everything
There is one part of Toronto construction that is growing rapidly:
Purpose-built rental.
Toronto purpose-built rental apartment starts rose 82% in the first half of 2026 compared with 2025.
Rental starts were also higher than condominium apartment starts for the first time since 1994.
This is positive for renters.
More purpose-built rental supply can increase choice and potentially reduce some pressure on rents.
But it also reveals how Toronto’s development market is changing.
Developers are increasingly building:
homes to rent
rather than:
homes to own.
For someone looking for a rental, that helps.
For a first-time buyer hoping to purchase a condo several years from now, it doesn’t necessarily create another ownership option.
Why Would Construction Slow When Canada Still Needs So Many Homes?
This is the central contradiction in the report.
Everyone agrees Canada needs more housing.
But knowing that homes are needed does not automatically make projects financially viable.
Developers are still dealing with high:
construction costs,
land costs,
financing costs,
government charges,
and borrowing costs.
At the same time, weak presales make it harder for some projects to obtain construction financing. Condo developers in particular may be reluctant to launch when investors and end-users are not buying enough units before construction begins.
So a city can desperately need new housing and still struggle to get projects built.
This Is Why Development-Charge Cuts and Housing Incentives Matter
This also connects directly to policies we recently discussed at JDL Realty, such as Mississauga’s reduction in residential development charges.
Those policies aren’t only about trying to make a new home slightly cheaper today.
A bigger objective is to improve:
Project Viability
If lower government charges, zoning reform, financing programs or other incentives reduce the cost of construction, some projects that previously did not make financial sense may be able to move forward.
That matters because Canada’s housing challenge is increasingly not just:
“How much does a home cost?”
but also:
“Can we actually build enough homes at today’s costs?”
What Does This Mean for GTA Buyers?
For buyers, the current market can still offer opportunities.
Prices are below previous peaks in many segments, buyers generally have more negotiating power than during the pandemic-era boom, and resale inventory is relatively available in some areas.
But buyers should avoid assuming that:
“There are lots of homes for sale now, so the housing shortage is over.”
Today’s resale inventory and tomorrow’s new construction pipeline are two different things.
You can have:
a softer resale market today
while simultaneously having:
too few new homes under construction for the future.
For buyers planning to purchase over the next several years, new-home launches and construction starts may therefore become increasingly important indicators to watch.
What Does This Mean for Condo Buyers?
The condo market is especially interesting.
Today’s buyer may benefit from:
more resale inventory,
lower prices,
less bidding competition,
and stronger negotiating power.
But at the same time, Toronto is starting very few new condo projects.
That does not mean condo prices are guaranteed to rise.
Markets can stay soft for longer than expected, and demand also matters.
But buyers should understand the difference between:
today’s excess resale inventory
and:
the future pipeline of newly built condos.
A weak market today can discourage construction.
Several years later, fewer completions can create a completely different supply environment.
What Does This Mean for Investors?
Investors also need to look beyond today’s numbers.
Record purpose-built rental construction means some neighbourhoods could see much more rental competition in the coming years.
At the same time, fewer condo completions could eventually reduce the flow of investor-owned units entering the secondary rental market.
CMHC warns that slowing condo completions may reduce an important source of rental supply in future years, potentially creating renewed pressure on rents and vacancy rates later on.
That means investors should increasingly study:
what is being built around the property — and what isn’t.
Current rent is only one part of the analysis.
Future supply matters too.
JDL Realty’s Perspective
The biggest takeaway from CMHC’s report is not simply:
“Canada needs 4.69 million homes.”
The more important issue is the timing.
Canada needs dramatically more housing over the next decade, yet important parts of the construction market are weakening today.
Toronto demonstrates the problem clearly.
Affordability has improved somewhat because prices and rent growth have softened.
But Toronto still needs at least 50% more annual housing starts, while ownership-oriented construction — particularly condos and freehold homes — remains exceptionally weak.
So buyers and investors need to consider two markets at the same time:
The market we have today
and:
The supply being created for tomorrow.
At JDL Realty Inc., Brokerage, we believe good real estate decisions should consider not only current prices, but also neighbourhood supply, development pipelines, housing type and long-term demand.
A market with plenty of listings today can still face limited supply several years from now.
And that is why understanding what is not being built can sometimes be just as important as watching what is currently for sale.
The Bottom Line
CMHC estimates Canada needs:
417,000–469,000 new homes every year
to restore housing affordability to approximately 2019 levels by 2036.
Current projected construction:
about 231,000 per year.
Toronto alone needs around:
62,000–68,000 annual starts
compared with roughly:
42,000 under current trends.
And yet construction is slowing.
That creates one of the biggest questions facing the GTA housing market over the next decade:
If we don’t build enough homes during today’s softer market, what happens when demand returns?
For buyers, sellers and investors, the answer may eventually matter just as much as interest rates or this month’s average home price.
If you’re considering buying, selling or investing in Toronto or the GTA, JDL Realty can help you understand both current market conditions and the longer-term housing supply trends shaping your decision.
Contact JDL Realty for a neighbourhood- and property-specific GTA real estate analysis.
Sources: CityNews Toronto
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