Canada: July Housing Demand Remained Steady While Supply Weakened

Canadian homebuilding activity plummeted to 229k in July—the lowest print in over a year. The monthly decline was entirely within the ever-volatile multi-unit segment, while single-family construction was about the same as the previous month (graph 1). The Canada Mortgage and Housing Corporation (CMHC) has been emphasizing the 6‑month trend. While essentially flat, it’s the lowest print in 15 months and remains about half of the CMHC’s target of 500k housing starts needed annually to restore pre-pandemic levels of affordability.

Regionally, homebuilding strength was seen in Quebec and the Maritime provinces in July. Montreal’s non-seasonally adjusted housing starts grew 3% year over year due to multi-unit construction. In contrast, July starts were down ‑42% y/y in Vancouver and -10% in Toronto over the same month last year.

In the resale market, seasonally adjusted home sales rose 0.5% m/m in July. Nationwide, new listings fell 1.6% in July and inventory eased to 4.7 months. The sales-to-new-listings ratio rose to 51.3%, keeping the national market firmly within balanced territory. Average and benchmark home prices were little changed in the month.

Toronto eked its way back into balanced market territory in July for the first time since March 2024 while Vancouver remained a buyer’s market (graph 2). Seasonally adjusted sales in Toronto grew for a fifth consecutive month while new listings continued to pull back. To date this renewed activity hasn’t been reflected in prices, which remain below 2025 year-end levels. Montreal’s seasonally adjusted sales and average sale prices were little changed in July.

Homebuying activity appears to be recovering from its weak start to the year, although the improvement remains uneven. Stable borrowing costs and better affordability in Canada’s most expensive markets may have opened opportunities for some households that had previously been priced out. Still, economic uncertainty and slower population growth could constrain the pace of the recovery over the near term.

Housing starts, supported by a number of policy measures—including reducing development charges External link. in some municipalities, removing or reducing GST/HST on new homes External link. for qualified buyers and CMHC financing programs for purpose-built rental construction—are expected remain stronger than current economic and demographic conditions would otherwise suggest. However, the outlook may vary across markets and housing segments. And today’s rental construction boom External link. may be setting up tomorrow’s homeownership shortage.