CIBC is warning that cracks forming in the housing market will weigh on the economy as construction flags and homeowners keep a tighter grip on their wallets.
The bank says in a new report that the housing market is too soft to encourage builders to break ground on new homes at the pace needed to lift the economy and deliver a long overdue supply injection.
The Canada Mortgage and Housing Corp. said last month that housing starts rose 5.6% in 2025, but CIBC deputy chief economist Benjamin Tal says those figures are outdated and often only count units where construction is well underway.
Falling property values in some parts of the country will also weigh on Canadians’ perceptions of their own wealth and ability to borrow against their homes, which Tal says will push more households to save rather than spend.
He says lower home prices could be a boon for first-time buyers attempting to break into the housing market this year.
But Tal also warns that’s not a long-term solution for affordability in the housing market and calls on all levels of government to work harder to cut the cost of buying a home if they want to deliver much-needed supply across Canada.