Softening Trend in Canada's Housing Starts Suggests More Downside in The Near Term, Says TD

09:22 AM EST, 11/18/2025 (MT Newswires) -- Canadian housing starts declined 17% month over month in October, more than offsetting September's 14% month-over-month gain, said TD.

However, starts remained elevated at 232,800 units last month.

For context, 210,000 units was the pre-pandemic run rate for Canadian housing starts. Stripping away monthly volatility, the six-month moving average of starts decreased 3% month over month to 269,000 units.

In urban markets, October's drop was driven by the multi-family sector, where starts fell by 44,100 to 169,700 units. Meanwhile, single-detached starts were flat at 41,000 units.

Last month's decrease in urban starts was broad-based regionally, with activity falling in seven of 10 provinces:

-- In a reversal of September's narrative, Ontario drove the national drop, as starts plunged by 46,100 to 40,100 units. Elsewhere, starts dipped in British Columbia (-1,700 to 32,500 units) and declined, but were still very elevated, in the Prairies (-2,700 to 69,900 units, supported by Alberta).

-- Starts increased in Quebec (+4,500 to 54,200 units) and in a relative rarity, topped Ontario last month. Starts were also higher in the Atlantic (+1,500 to 14,100 units), driven by Nova Scotia.

The dip in October housing starts sets Q4 off on a softer footing in terms of residential investment's contribution to real gross domestic product growth, stated TD. That said, builders are still starting new units at a fairly healthy clip, supported by the purpose-built rental market.

Notably, homebuilding in the rest of Canada is much stronger than in Ontario, as the latter is being weighed down by a retrenchment in condo construction, pointed out the bank.

Looking ahead, the softening trend in building permits suggests some further downside for starts in the near-term, according to TD. This is consistent with the bank's view that homebuilding is likely to cool next year, as modest population growth weighs on rents and weak pre-sales activity restrains starts in the ownership market.

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