CMHC Forecasts Extended Condominium Construction Slowdown Through 2028
The Canada Mortgage and Housing Corporation (CMHC) has released its latest annual housing forecast, projecting a significant and prolonged pullback in condominium construction that is expected to continue through 2028. According to the agency, Canada's condominium market remains the most vulnerable segment of the housing system as builders scale back on new projects amid persistent economic challenges.
Construction Decline and Economic Factors
The national housing agency anticipates new home construction will decline steadily through 2028, with condominium development experiencing the most pronounced slowdown. Under CMHC's baseline outlook, national housing starts are forecast to decrease from 259,000 units in 2025 to 247,000 in 2026, then drop further to 223,000 in 2027 and 216,000 by 2028.
Several interconnected factors are contributing to this extended construction slowdown. Higher construction and financing costs are significantly impacting project viability, particularly in Canada's largest urban centers. These economic pressures are compounded by slower population growth and softening buyer demand, creating a challenging environment for new condominium development.
Market Conditions and Price Projections
At the national level, housing demand is expected to remain weak, with resale activity staying below historical averages. Average resale prices are projected to show only modest gains after declining in 2025, increasing from $698,000 in 2026 to $727,000 by 2028 according to CMHC projections.
The agency attributes much of the market caution to lingering geopolitical and trade uncertainty, which is keeping many potential buyers on the sidelines. This hesitancy is particularly pronounced in higher-priced markets where affordability constraints remain acute, creating additional barriers to market participation.
Economic Backdrop and Regional Impacts
A softer economic environment is reinforcing this cautious approach throughout the housing sector. Real GDP growth is forecast at just 0.7 percent in 2026, while employment growth slows sharply to 0.3 percent, down from 1.5 percent in 2025. CMHC notes these conditions will limit the pool of households able to absorb new condominium supply, even as borrowing costs stabilize.
"We expect Canada's economy to grow slowly in 2026, as many households and businesses remain cautious because of geopolitical and trade uncertainty," explained CMHC deputy chief economist Kevin Hughes. "This caution is leading many households to delay buying homes and making builders more hesitant to start new projects."
The effects of this construction slowdown are expected to be most pronounced in Toronto and Vancouver, where condominiums have historically driven new housing supply. In Toronto, CMHC forecasts apartment starts (which serve as a proxy for condominium construction) to fall from more than 37,000 units in 2023 to roughly 16,000 to 19,000 units in 2026. Simultaneously, the agency expects Toronto's rental vacancy rate to rise to about 3.5 percent in 2026, up from 1.4 percent in 2023, which will ease rent growth and further weigh on the economics of new condominium development.
In Vancouver, CMHC projects apartment starts to decline from approximately 27,600 units in 2023 to about 17,000 to 21,000 units in 2026, reflecting both weaker demand and persistently elevated construction costs.
Long-Term Market Implications
Despite this significant pullback in construction activity, CMHC does not anticipate a sharp correction in home prices. Instead, the forecast predicts a fragile market balance where a multi-year slowdown in condominium starts could potentially constrain supply if demand rebounds more quickly than construction activity later in the decade.
The extended construction slowdown represents a significant shift in Canada's housing landscape, with implications for housing affordability, urban development patterns, and economic growth in major metropolitan areas. As builders navigate these challenging conditions, the housing market faces a period of adjustment that will likely shape development patterns for years to come.
