Toronto's housing sector experienced a steep decline in July, with new housing starts plummeting by 69% compared to the same month last year, and a year-to-date decrease of 49%.
The Canada Mortgage and Housing Corporation (CMHC) has released its July 2025 housing starts report, revealing a 4% year-to-date increase in housing starts compared to the same period in 2024. The total monthly seasonally adjusted annual rate (SAAR) of housing starts in July 2025 was 294,085 units, a 4% increase from June.
Rishi Sondhi, an economist at TD, commented that starts in July 2025 hit the highest level since September 2022. He attributes the growth in housing starts to the rental market, with gains likely supported by population growth and government financing programs. However, Sondhi anticipates some cooling taking place in 2026 due to slowing population growth and declining rents in several jurisdictions.
Toronto continued to struggle in July, with starts falling 69% year over year and 49% year to date, due to a decrease in multi-unit and single-detached starts. High development costs continue to choke new rental supply in Toronto, according to Lechter. In contrast, Alberta experienced growth, with Edmonton posting a 36% annual increase in starts, and Calgary recording a 22% year-to-date increase despite a 24% year-over-year decrease in July. Nicole Lechter, senior real estate analyst with RSM Canada, attributes Alberta's impressive numbers to a lack of rent control.
The province with a significant increase in housing starts in July 2025 is Ontario, attributed to strong demand, government incentives, and improved economic conditions. Montreal saw a 212% year-over-year increase in actual housing starts, largely due to multi-unit starts. Building permit levels suggest that starts will remain sturdy in the near term, but foundation pouring is likely to taper off in the longer term.
In Vancouver, despite starts rising 24% year over year, vacancies are climbing, and developers may pull back. Economic uncertainty and slowed immigration are preventing new housing from being proposed and pre-sold. Indigenous partnerships in Vancouver are seen as key to unlocking housing and bypassing municipal bottlenecks.
Rents in some major markets are on the decline, and Sondhi notes that the growth in housing starts is being driven by the rental market. Building activity in the ownership market is likely to remain subdued, weighed on by past declines in pre-construction home sales.
Tania Bourassa-Ochoa, CMHC's Deputy Chief Economist, stated that the first seven months of 2025 have been stronger than the same timeframe in 2024. However, the increase in housing starts was largely due to increased multi-unit starts in the Prairie Provinces and Quebec. The year-over-year housing starts in July 2025 were up 4% from 22,610 units in July 2024 to 23,464 units.
In conclusion, the housing starts market in Canada is showing signs of growth, particularly in the rental sector. However, factors such as economic uncertainty, immigration, and development costs continue to impact the stock market today differently across various regions.
