Canada Housing Starts Drop 15% in January 2026 – CMHC Data & 5-Year Trend Analysis

Canada Housing Starts Drop 15% in January 2026 – Full 5-Year Data and Market Impact Analysis

Canada’s residential construction sector has recorded a significant slowdown at the start of 2026. According to the latest official data released by Canada Mortgage and Housing Corporation (CMHC), housing starts declined by 15 percent in January 2026 compared to the previous month.

The seasonally adjusted annual rate (SAAR) of housing starts fell to 238,049 units in January, down from 280,668 units in December 2025. In addition, the six-month moving average trend decreased to 254,794 units, indicating a broader cooling in construction momentum rather than just a short-term monthly fluctuation.

Housing starts are considered a leading indicator of the real estate market because they reflect developers’ confidence and future housing supply. A decline of this magnitude signals caution among builders and may have medium-term implications for supply levels across the country.

Five-Year Housing Starts Data (2021–2025)

A broader historical perspective helps place the January decline in context. Over the past five years, Canada’s annual housing starts have shown volatility:

2021: 271,198 units

2022: 261,849 units

2023: 240,267 units

2024: 245,367 units

2025: 259,028 units

After peaking in 2021, housing activity gradually declined through 2023 before stabilizing in 2024 and rebounding in 2025 with a 5.6 percent annual increase. However, despite last year’s recovery, the January 2026 data suggests that momentum has weakened again.

Regional Variations Across Major Cities

Regional performance varied across Canada’s major urban markets. In Toronto, single-detached housing starts declined, reflecting softer demand in that segment. Meanwhile, Vancouver recorded gains in multi-unit residential projects, helping offset some national weakness. In Montreal, multi-unit starts showed year-over-year declines.

Large metropolitan areas often experience volatility because multi-unit developments, such as condominiums and apartment buildings, can significantly influence monthly totals depending on project timing.

Key Reasons Behind the Decline

Several structural and economic factors appear to be contributing to the slowdown:

Elevated construction costs, including materials and labor.

Financing constraints and tighter lending conditions.

Cautious developer sentiment amid economic uncertainty.

Rising inventory levels in certain urban markets.

Although expectations of interest rate stabilization exist, large-scale residential projects require extended planning and financing cycles. As a result, developers may delay new launches even if borrowing conditions begin to ease.

Economic and Market Implications

If the slowdown persists, short-term impacts could include reduced employment growth in the construction sector and slower investment activity. Over the longer term, reduced housing starts may tighten supply, potentially placing upward pressure on home prices and rental markets—particularly in high-growth urban centers.

Canada continues to face structural housing supply challenges driven by population growth and immigration. Therefore, sustained declines in new construction could complicate affordability efforts unless policy measures accelerate approvals, land availability, and purpose-built rental development.

Conclusion

As of 16 February 2026, the confirmed 15 percent monthly drop in January housing starts marks a notable shift in Canada’s residential construction activity. While 2025 showed moderate annual recovery, the latest figures indicate renewed softness at the beginning of 2026.

The coming months will be critical in determining whether January’s decline represents temporary volatility or the beginning of a broader slowdown. Policymakers, investors, and developers will closely monitor interest rate trends, construction costs, and regional supply conditions to assess the trajectory of Canada’s housing market in 2026.