Builders finished the year with shovels in the ground after a quiet autumn, as a 5.6% increase in housing starts pushed the 2025 total to 259,028 across the country.
That's the fifth-highest total recorded, though residential construction is expected to slow this year, according to a Canada Mortgage and Housing Corporation report.
New residential building in towns and cities with populations over 10,000, rose by 6% in 2025 compared to a year earlier, to 241,171 units. Starts on rental projects made up just over half of all new homes, according to the CMHC report. Montreal led all cities with a 58% surge, and Calgary and Edmonton set new annual records. These gains offset steep drops in Toronto and Vancouver.
In fact, housing starts last year fell 31% in Toronto and 3% in Vancouver, while they increased 14% in Calgary, 16% in Edmonton, 12% in Ottawa–Gatineau, 18% in Winnipeg and 38% in Halifax, the CMHC said.
The momentum comes as Canada’s rental vacancy rate has reached 3.1%, the highest level in years and about twice the rate seen during the recent housing crisis, according to the CMHC.
“While housing starts in 2025 finished ahead of 2024 and inched up in December, most of the momentum in housing construction" occurred in the spring and summer months, said Mathieu Laberge, CMHC’s chief economist and senior vice president of housing economics and insights, in a statement. “Since September, the trend in housing starts has consistently decreased.”
Also, Laberge said, developers focused on projects with fewer units.
CMHC expects housing construction to slow
“In 2025, economic uncertainty and the diminished viability of large residential towers encouraged a shift towards smaller-scale projects,” he said. “Housing starts are beginning this year from a weaker position and market intelligence suggests slowing momentum for residential construction.”
The data also shows clear outliers. Starts in St. Catharines-Niagara jumped 28% in 2025, and Kitchener-Cambridge-Waterloo saw a 20% increase, according to the CMHC.
Provincial results were mixed. Prince Edward Island led the country with a 9% increase in housing starts in 2025, according to the CMHC. British Columbia rose 6% and Alberta climbed 5%. Ontario was flat at 87,378 units and Quebec rose 5%. Saskatchewan and Manitoba slipped slightly.
Looking ahead, the CMHC MLI Select program continues to steer developers toward rental construction by offering financing terms they cannot match in the condo market. The program allows for insured loans with amortizations of up to 50 years and loan amounts that can reach over 90% of project cost when a building meets affordability or energy targets.
Those terms typically cut monthly carrying costs and reduce the amount of equity a developer must raise, making rental projects easier to start than condominiums in a market where presales have slowed. Developers say these incentives are strong enough to shift entire pipelines toward rental buildings, which is one reason apartment construction has reached levels not seen in years even as vacancy has climbed to above 3%.
Even with these gains, Canada remains far short of federal housing targets. The CMHC estimates the country needs roughly 5 million new homes over the next decade to restore affordability. The Office of the Parliamentary Budget Officer puts the requirement at 3.2 million.
Urban starts remain well below the pace CMHC says is needed, and higher construction costs and development fees continue to weigh on new projects.
Laberge said CMHC will release an updated Housing Market Outlook in February. “These trends, along with geopolitical and trade uncertainty, remain top of mind,” he said.