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Housing Supply Gap Risks Renewing Canada's Affordability Problem, CMHC Says

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Canada's housing market is entering a new phase, marked by slower population growth, more balanced rental conditions, improving affordability and elevated housing completions, according to the Canada Mortgage and Housing Corp. (CMHC) on Thursday.

The bigger long-term risk is an overly sharp slowdown in construction, which could leave Canada short of housing when demand picks up again, wrote CMHC in its Fall 2026 Housing Supply Report.

"A key risk is not building enough homes to meet demand when the market strengthens again," said CMHC Deputy Chief Economist Aled Ab Iorwerth in an in-house podcast made available on the website.

Restoring pre-pandemic affordability by 2036 would require 417,000 to 469,000 new homes annually, leaving a projected shortfall of 187,000 to 238,000 units a year, said CMHC.

Declining project launches, high construction costs, tighter presale financing and softer condo demand are already weighing on development.

Near-term demand should remain subdued as slower population growth weighs on housing needs. Over time, stronger household formation, income growth, and improved affordability should revive demand, but supply may struggle to keep pace, it added.

Rental construction is helping ease imbalances in some markets, but a growing shortage of ownership housing, especially condos and ground-oriented homes, is becoming a concern, said Canada's national housing agency.

"Near-term affordability improvements since 2023 may be difficult to sustain if housing construction does not keep pace with future demand, according to Ab Iorwerth.

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