The federal housing agency says Canada narrowly chipped away at its supply gap over the past year, but the country still needs up to nearly 4.7 million new homes over the next decade to restore pre-pandemic affordability by 2036.
Canada Mortgage and Housing Corp. released its latest supply gap estimate report, which said between 417,000 and 469,000 new housing units are needed per year across the ownership and rental markets over the next decade to reach affordability targets.
That’s down slightly from its last estimate in July 2025, when CMHC said the pace of home construction would need to roughly double to between 430,000 and 480,000 new units annually over the coming decade.
But the agency warned recent affordability gains are at risk as new home construction is instead expected to slow, especially in the home ownership market.
“Although slower population growth has brought some improvements in affordability, new construction is slowing faster than demand,” CMHC deputy chief economist Aled ab Iorwerth said in a news release.
“The key risk now is Canada underbuilds during this softer market and finds itself further short of housing when demand strengthens again.”
A total of 131,851 housing starts have been recorded so far this year through July, down 4% from the same seven-month period in 2025.
At the current pace of housing construction, Canada is on track to add around 231,000 housing units per year over the next decade, according to the report, around half the annual pace needed to reach the 2019 affordability levels by 2036.
The agency defines affordability as the share of income that goes toward housing. In general, it aims to return to levels of affordability at which adjusted house prices are no higher than 30% of average gross household income.
The report said meeting future housing demand will depend on the pace of new construction. But the sector is facing pressure from high construction costs, while presale financing conditions remain difficult for some projects. Weak condominium market conditions are also making developers cautious about launching new projects.
“Housing supply needs will increase over the long term. Population growth is expected to recover across most major cities, and rising incomes will support housing demand,” the report said.
“As a result, there will be a need for more homes. Some households may have delayed forming because of affordability challenges. As conditions improve further, some of this suppressed demand will re-emerge.”
While CMHC said the national supply gap is broadly unchanged from the assessment last year, there are key differences across regional markets.
Since the agency’s previous estimates, it said the housing supply gap has narrowed in Toronto, as lower home prices have improved affordability. However, new construction activity has weakened “sharply,” particularly in the condo market, limiting ownership housing supply.
The gap has remained stable in Vancouver, where improved affordability and stronger construction levels have been offset by slower future supply growth and population pressures.
Record housing construction in Calgary has narrowed that city’s housing supply gap by almost half, the report said, however affordability challenges remain, especially for lower-income households and prospective homeowners. Elsewhere in the province, Edmonton remains the only large market in Canada without a housing supply gap “because housing construction has generally kept pace with population growth.”
But the gap has grown larger in both Montreal and Ottawa compared with a year ago. In Montreal, housing construction levels remain high, the report said, but new supply is concentrated in rental housing, while weak condo supply is limiting ownership options.
Similar challenges persist in the country’s capital city, where affordability has deteriorated, CMHC said.
“We expect housing demand to grow faster than the housing supply despite strong construction activity,” it said of Ottawa.