July in Toronto witnesses a significant decline: Housing starts plummet by 69% compared to the previous year and 49% overall since the start of the year
In a notable development, Canada's housing market is witnessing a significant surge, as evidenced by the latest data from the Canada Mortgage and Housing Corporation (CMHC). The total monthly seasonally adjusted annual rate (SAAR) of housing starts hit a multi-year high in July 2025, with a 4% increase from the previous month, reaching 294,085 units.
Montreal, in particular, has seen a remarkable 212% year-over-year increase in actual housing starts, largely due to significantly higher multi-unit starts. This growth is also being observed in the Prairie Provinces and Quebec, according to Tania Bourassa-Ochoa, CMHC's Deputy Chief Economist.
The first seven months of 2025 have been stronger than the same timeframe in 2024, a trend that Bourassa-Ochoa attributes to increased multi-unit starts. The regions experiencing a significant increase in housing starts include Calgary, Edmonton, Montreal, Halifax, and Ottawa. Notably, Ottawa has nearly doubled its housing starts due to rental construction.
Rishi Sondhi, an economist from TD, has pointed out that this strong trend in homebuilding is being underpinned by the rental market. He also noted that rents in some major markets are on the decline, which could potentially influence future housing starts.
However, Toronto continues to struggle, with starts falling 69% year over year and 49% year to date. This downward spiral is likely to continue without policy reform, according to Nicole Lechter, senior real estate analyst with national accounting firm RSM Canada. Lechter attributes Alberta's impressive numbers, in part, to a lack of rent control.
Indigenous partnerships are seen as key to unlocking housing in the Vancouver region, as they can bypass municipal bottlenecks, accelerate approvals, and deliver large-scale rental projects, according to Lechter.
Year-to-date housing starts in 2025 were also up 4%, with Alberta showing marked growth. Edmonton posted a 36% annual increase in starts, and Calgary recorded a 22% year-to-date increase.
Rishi Sondhi anticipates some cooling taking place in 2026 due to slowing population growth and dropping rents in several jurisdictions. However, he also mentioned that housing starts in July 2025 hit the highest level since September 2022.
Despite the encouraging signs, high development costs continue to choke new rental supply in Toronto, and economic uncertainty and slowed immigration are preventing new housing from being proposed and pre-sold, according to Lechter.
In conclusion, while Canada's housing market is experiencing a surge, particularly in Montreal and the Prairie Provinces, challenges persist, particularly in Toronto. The trends observed in 2025 are reflective of investment decisions made months or even years ago, and future developments will depend on various factors, including policy reform, economic conditions, and population growth.
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