Canada: Homebuilders Hold Steady as Buyers Pull Back in February

The pace of seasonally adjusted housing starts normalized in February, rising to nearly 251k, after several major weather events resulted in a slow January (240k, revised up from 238k). As is typically seen, the month−to−month variability was entirely within the multi−unit segment. Single family housing starts edged down last month, dropping under 40k—the lowest level since February 2019 outside of early pandemic disruptions (graph 1).

In the resale market, February’s seasonally adjusted home sales dipped 1.3% m/m. Sales came in slightly lower than seasonal norms and well below February 2025 levels (-8.1% y/y).

Nationally, new listings declined by 3.9% m/m and inventory held steady at 5.0 months in February—above the post-2019 average of 3.6 months but consistent with longer−term trends. The sales-to-new-listings ratio rose by more than a full percentage point to 47.6%—a balanced market. Toronto and Vancouver continued to be buyer’s markets, while the Province of Quebec and other major centres remained in balance (graph 2). 

With demand still soft and supply back near long−term norms, there was little pressure on home selling prices last month. Regionally, however, there was significant variation. Home sales in Quebec City reaccelerated, jumping 31% m/m, while average selling prices rose 4.6%. Sales continued to fall in Toronto, and while they rose in Vancouver, average prices declined in both cities.

With the release of February’s statistics, leadership at the Canada Mortgage and Housing Corporation (CMHC External link.) has asked, “is Canada’s housing construction holding its ground or just pausing before a pullback?” Against that backdrop, rising oil prices External link. are expected to add pressure to inflation, prompting financial markets to shift from anticipating rate cuts to considering possible rate hikes. As longer-term bond yields have risen, borrowing costs have followed, squeezing financing costs for both homebuyers and builders. Higher mortgage payments at renewal External link. remain a concern for many households. Meanwhile, 2025’s sharp downturn in presale condominium activity in major markets raises the risk of a future drop in multi-unit construction once today’s project pipeline is completed. At the same time, we expect External link. some first-time buyers of newly built properties return once the federal GST and Ontario’s PST rebates come into force. Moreover, all levels of government appear increasingly aligned on boosting housing supply. As long as CMHC funding for rental construction continues to flow, our expectation External link. is that housing starts should remain above what current economic conditions would otherwise suggest—the risk is what happens to homebuilding if the music (low-cost financing) stops.