BMO Says Canada's Housing Construction Will Take Time To Pick Up

07:56 AM EST, 02/18/2026 (MT Newswires) -- Canadian housing starts slipped more than 15% in January as tough winter weather posed a challenge, said Bank of Montreal (BMO).

While the monthly series is "choppy," it's clear that housing starts remain historically elevated even as market activity for new and existing homes is subdued, noted the bank.

The fact that building permits are even sturdier suggests there is further strength in the pipeline, as anecdotes suggest some builders are holding onto permits waiting for market conditions to improve, stated BMO.

A glut of inventory for new homes, particularly in the condo segment, is still coming through and pushing down prices, pointed out the bank. That's been keeping builders on the sidelines, especially in southern Ontario.

Meanwhile, the market for existing homes has been moving sideways as affordability crimps demand, despite mortgage rates coming down in the last few years, it added.

With policy rates likely to hold and economic uncertainty staying elevated, it will take some time for housing construction to meaningfully pick up, according to BMO. As a consequence, the CMHC's revised target of 247,000 starts for this year -- down about 5% from 2025 -- looks a touch optimistic compared with the bank's current call of 240,000.

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