Is Canada Building Enough Homes? What It Means for Prices

Is Canada building enough homes? No, and this week Ottawa stopped pretending it would soon. The biggest housing story of the week was a quiet one: the new federal budget dropped the goal of doubling homebuilding and set a smaller target for non-market housing instead.

What that means for you: today's slow market won't last forever. When buyers come back, there won't be enough new homes waiting for them. Here's my week in review and what it means if you're buying, selling or investing.

What changed with Canada's housing target?

The 2025 promise was to double homebuilding. Budget 2026 doesn't mention it. Instead, the plan commits nearly $15 billion to triple annual non-market housing starts to 24,000, plus $10 billion for about 25,000 supportive and transitional homes.

TRREB says Build Canada Homes gets another $13 billion over ten years, bringing it to $45 billion, with a goal of 200,000 new homes over the decade. TRREB also backed the plan to let foreign buyers purchase newly built homes, while the ban on existing homes runs to January 1, 2029.

That's real money. But 24,000 non-market starts a year is a small slice of what the country needs.

How big is Canada's housing shortage?

CMHC's fall Housing Supply Report puts numbers on it. At the current pace, Canada will start about 231,000 homes a year. To get back to pre-pandemic affordability by 2036, we'd need 417,000 to 469,000 a year.

That's a gap of 187,000 to 238,000 homes, every year, for a decade.

Toronto is where it hurts most:

• About 42,000 starts a year at today's pace, against 62,000 to 68,000 needed
• Starts need to rise by at least 50% over the next decade
• Only 156 condo units were started in the City of Toronto in the first half of 2026
• Purpose-built rental starts rose 82%, the only major segment that grew

CMHC's warning is the line I keep coming back to: "the key risk is that Canada does not build enough during today's market softening."

Will house prices go up in Canada because of the shortage?

Not next month. Higher rates and slow sales are keeping a lid on things right now. But supply is the long game. When condo starts in Toronto almost stop, there are fewer new units to buy three or four years from now, when today's projects would have finished.

Fewer homes plus returning demand usually means one thing: more competition, and higher prices. I'm not calling a boom. I'm saying the quiet market is hiding a supply problem.

What the housing shortage means for buyers, sellers and investors

Buyers: this slow stretch is your window. You have choice and negotiating room now that you may not have once the market turns. My rent or buy breakdown for Toronto runs the real numbers.

Sellers: don't panic sell. A thin pipeline of new homes supports resale values over time. Price to today's market, but know the long-term trend is on your side.

Investors: rental construction is the one segment growing, so plan for more competition there. Pair this with the new Budget 2026 mortgage changes for fourplex investors before you buy.

Want local numbers? Check this month's GTA market report.

Frequently asked questions

Why isn't Canada building enough homes?

High building costs, tariffs on materials, a soft labour market and higher interest rates all slow construction. In Toronto, new condo construction has nearly stopped, with just 156 units started in the first half of 2026. Purpose-built rentals are the exception, with starts up sharply this year, but they can't fill the whole gap on their own.

What is Build Canada Homes?

Build Canada Homes is a new federal Crown corporation that builds and funds non-market housing, like affordable, supportive and transitional homes. Budget 2026 adds $13 billion over ten years, for $45 billion in total, with a goal of 200,000 new homes over the decade. It won't build the market homes most buyers are shopping for.

Is now a good time to buy a house in Ontario?

For many buyers, yes, if your job is stable and you're planning to stay at least five years. Sales are slow, sellers are negotiating, and new supply is shrinking. Get pre-approved first, know your monthly limit, and compare a few neighbourhoods before you commit. Every situation is different, so run your own numbers.

If you want to talk through what this means for your plans, book a call with me. No pressure, just straight answers.