National Bank Sees Canada's Housing Starts Staying Resilient in 2026

07:11 AM EST, 01/21/2026 (MT Newswires) -- Canadian housing starts ended 2025 on a strong note, rising for the second consecutive month to reach 282,400, their highest level in five months and well above consensus expectations, said National Bank of Canada.

The increase in housing starts in December is mainly attributable to an increase in construction in Ontario, where the level of housing starts was the highest since July 2024, noted the bank. There have been increases in several major cities in this province, notably in Hamilton, Ottawa, and Toronto, where housing starts reached their highest level in three months and rose above those in Montreal and Calgary, but remain below those in Vancouver.

In 2025, there was a total of 259,000 housing starts nationwide, an increase of 5.6% compared with 2024. This makes it the third-strongest year on record for the new construction market after 2021 and 2022.

The year that just ended marks a major change for residential construction, as for the first time, more than half (50.6%) of new construction was for the rental market. In absolute terms, this is also the highest number of rental units ever started in a single year.

On the other hand, the number of units intended for homeowners represented only 27.1% of new construction, the lowest proportion ever recorded, while condos represented 22.2%, the lowest proportion since 2022 and the smallest number of units in absolute terms in this segment since 2010.

These structural changes are the result of several significant trends, such as the need for densification, affordability challenges, and low rental vacancy rates in recent years. However, given the significant increase in construction costs in recent years, government support to stimulate construction has become essential to restore affordability in

the country, with 88% of rental units built in 2024 -- and likely a similar proportion in 2025 -- relying on one of CMHC's programs, stated National Bank.

Looking ahead, the bank believes housing starts could remain resilient in 2026, supported by favorable interest rates and persistent supply shortages.

However, population decline and rising vacancy rates in the rental sector are likely to represent headwinds that could slow new construction later this year and in 2027, added National Bank.

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