Canada’s national housing starts fell five per cent in July compared with June, according to Canada Mortgage and Housing Corporation data released this month — but that single national number hides a much sharper story playing out city by city. In Vancouver, housing starts collapsed 42 per cent year-over-year, a decline the head of the region’s leading development advocacy group calls the worst downturn in three decades. In Montreal, over the same period, starts actually rose three per cent. Toronto sits in between, down 10 per cent. Put side by side, the three numbers explain why Canada’s biggest housing markets are moving in opposite directions at the same time — and what that split could mean for the country’s rental supply over the next two years.
A 30-Year Low in Vancouver, But Not Everywhere
CMHC recorded 1,810 housing starts in Vancouver in July, against 1,540 in Toronto and 2,458 in Montreal — meaning Montreal, a smaller city than either Vancouver or Toronto, actually broke ground on more new homes last month than both combined nearly matched. Mike Drummond, CEO of the Urban Development Institute, told CBC News the Vancouver numbers reflect “the worst housing market and housing downturn in the last 30 years,” driven by construction costs that have made new projects financially unworkable. The collapse traces back to the region’s presale condo market: data provider Zonda Home Canada found zero concrete high-rise condo projects launched presales in Metro Vancouver in the first quarter of 2026, compared with 152 launched in the same quarter a year earlier, according to reporting in Business in Vancouver. Since presale contracts are what typically unlock construction financing for concrete towers — often 60 to 70 per cent of units need to be sold first — a presale freeze shows up as a starts freeze roughly a year later, which is exactly the lag now appearing in July’s numbers.
Why Montreal Is Building While Vancouver Isn’t
CMHC’s own deputy chief economist, Tania Bourassa-Ochoa, told CBC that “fewer new projects are being started in many markets, notably in Vancouver, Calgary and Toronto” — meaning Vancouver’s crash isn’t an isolated event, but part of a broader softening across some of Western and Central Canada’s most expensive markets. Montreal’s resilience comes down largely to cost: multi-unit construction there remains financially viable at price points that no longer pencil out in Vancouver or Toronto, letting Montreal builders keep launching projects even as financing conditions tighten nationally. That gap suggests Canada’s housing slowdown isn’t uniform economic weakness so much as a problem concentrated in the specific markets where land and construction costs have outrun what buyers and renters can absorb.
What the Divergence Means for Renters
The timing compounds the concern. CMHC’s own multi-year outlook, published earlier this summer, projects national housing starts easing further, from roughly 241,400 units in 2026 to 223,400 in 2027 and 211,900 in 2028 — a declining trajectory even before July’s numbers came in. In Vancouver specifically, CMHC has flagged that purpose-built rental construction, which had been one of the few bright spots offsetting the condo slowdown, is itself expected to soften in the second half of 2026. That’s a notable shift: rental construction was supposed to be the release valve for a market where ownership has become unaffordable for most new households. If that valve narrows just as condo starts have already cratered, the supply pressure that has pushed Vancouver rents higher for most of the past decade has little else to relieve it.
The Open Question
Drummond’s prescription — reduce construction costs — is easier said than done, since much of that cost sits in municipal fees, land prices and financing rates outside any single developer’s control. Ottawa’s housing agenda has leaned on incentives to unlock rental construction specifically, but CMHC’s own forecast of a second-half slowdown suggests those incentives haven’t been enough to keep the one segment that was still growing on track. Whether federal and provincial governments adjust that approach, or whether Vancouver’s 30-year-low starts number becomes the new normal rather than a temporary trough, will likely only become clear once CMHC’s next data releases show whether the presale freeze behind this decline has begun to thaw.
Via CBC News and Canada Mortgage and Housing Corporation. Original CBC reporting: cbc.ca.
