Toronto builders broke ground on just 156 new condominium units in the first half of 2026, a small fraction of the roughly 7,000 units the city has averaged annually over the past decade, according to the Canada Mortgage and Housing Corporation’s Fall 2026 Housing Supply Report, published Sept. 14 and reported by Storeys.
The number marks a milestone as much as a shortfall. For the first time since 1994, rental apartment starts in Toronto outpaced condominium starts, CMHC found, with rental apartment construction climbing 82 per cent in the first half of 2026 compared with the same period a year earlier. Population-adjusted housing starts in the city, excluding the unusually low year of 2025, were the lowest since 1996, CMHC said.
Vancouver is following a similar path. Condo apartment starts there fell 40 per cent in the first half of the year, the weakest opening six months since 2011, while rental construction now accounts for 60 per cent of the city’s 2026 starts, up from under 20 per cent a decade ago, CMHC said. Rental starts in Vancouver rose 36 per cent from a year earlier.
Montreal shows the same tilt taken even further, though on an earlier timeline. In its Spring 2026 Housing Supply Report, covering 2025 activity, CMHC said rental construction accounted for more than 80 per cent of the city’s starts that year, with condo starts falling to a record low.
Nationally, purpose-built rental apartments now make up two-thirds of all apartment starts in Canada’s major markets, CMHC said, a structural shift the agency attributes to higher financing costs and softer resale demand making condo pre-sales harder to move, while federal incentives have made rental projects comparatively cheaper to build. CMHC estimates the country needs 417,000 to 469,000 housing starts a year to restore 2019-level affordability by 2036, a shortfall of 187,000 to 238,000 homes annually at current production levels. Toronto alone needs 21,000 to 26,000 more starts a year, a 50 per cent increase from its current pace, while its backlog of permitted but unbuilt units has fallen 50 per cent from its 2023 peak, a sign builders are not banking land for future condo phases the way they once did. Vancouver’s shortfall is smaller, five to seven thousand additional annual starts, and CMHC said the city’s overall supply gap held roughly steady through 2026.
The condo-to-rental pivot also shows up in CMHC’s separate, more frequent monthly starts data. The national seasonally adjusted annual rate of housing starts held essentially flat at 229,046 units in August, down slightly from 229,360 in July, the agency reported Sept. 16, while the six-month trend fell 1.3 per cent to 244,149 units and starts in centres of 10,000 people or more were down 2 per cent from a year earlier. Multi-unit starts fell 2 per cent from July even as single-detached starts rose 2 per cent. “Housing starts continued to trend slightly down in August, as modest gains in Quebec and Alberta only partially offset the decline in other provinces, most notably, Ontario,” said Kevin Hughes, CMHC’s deputy chief economist.
Read against the supply report, the six-month trend numbers show where some of that Quebec and Alberta strength, and the resilience in Montreal and Vancouver, is coming from. Montreal’s six-month trend rose 6 per cent from July to 30,492 units and Vancouver’s rose 6 per cent to 24,523 units, while Toronto held flat at 25,131 units, CMHC data show. The pattern is consistent with rental towers, rather than condo towers, doing the heavy lifting.
The construction pivot is unfolding against a resale market that has barely moved in months. The Canadian Real Estate Association reported Sept. 15 that national home sales fell 6.9 per cent in August from a year earlier, its sales-to-new-listings ratio slipped to 49.1 per cent from 51.1 per cent in July, below the long-term average of 54.7 per cent, and its home price index was down 3 per cent year over year even as prices held flat from July. “Sales activity and price trends were largely unchanged for a fourth consecutive month in August,” said Shaun Cathcart, CREA’s senior economist. CREA chair Garry Bhaura said a modest rebound in new listings was “broad based across all the largest markets.”
Taken together, the two data sets point to the same conclusion from opposite sides of the market. With resale demand stalled for four straight months, builders in Canada’s biggest cities are increasingly choosing to build apartments they can rent out rather than condos they need to pre-sell, even as the country’s underlying housing shortage keeps widening.
