Canada Housing Starts Rise in September, Though Market Faces Longer-Term Supply Gap

By Robb M. Stewart

OTTAWA--Canadian housing starts picked up last month though the pace remains soft as the broader market shows signs of cooling into the end of the year.

Housing starts across Canada came in at a seasonally adjusted annualized rate in September of 248,896 units, a 2.8% rise from the month before, Canada Mortgage and Housing Corp. said Friday. The market was expecting about 230,000 residential housing projects to have begun, after starts edged down 0.1% in August and fell 5.6% the month before.

The trend measure--a six-month moving average of the monthly seasonally adjusted annual rate of housing starts--was little changed for the month, nudging up 0.6% to 250,411, Canada's national housing agency said.

Monthly housing starts were down 11% year-over-year in centers with a population of 10,000 or more, with 19,984 units recorded in September. That took the year-to-date total of actual starts in these areas to 170,964, down roughly 4% from the same period in 2025.

"A key risk for Canada now is not building enough during this period of softening housing markets across the country," said Aled ab Iorwerth, deputy chief economist at the housing agency.

In Canada's four most populous provinces, only Quebec has seen modest gains in housing starts this year and each of the seven major centers are behind 2025's pace for new home construction, he said.

The number of housing units under construction in centers with a population of 50,000 or more in Septmber was flat month-over-month at 371,617 units, while completions decreased with construction finishing on 17,398 units, down 0.9% compared with August.

The number of units with approved building permits but not yet started increased 1.1% month-to-month to 143,929 units in September.

Canada Mortgage and Housing Corp. has forecast that housing starts in the country need to rise to between 417,000 and 469,000 a year to restore affordability to prepandemic levels by 2036, a target that is at risk as new home construction has slowed. It projects the country continues to face a longer-term housing supply gap of 187,000 to 238,000 homes annually over the next decade.

After falling sharply in July, the value of residential building permits issued in August rose 15.3% from the month before and 17.9% from the same month last year.

Resale activity has been volatile for much of the last two years as prospective home buyers have faced heightened uncertainty due to trade concerns and tariffs, and more recently from elevated energy costs and a rise in fixed mortgage rates. The Canadian Real Estate Association now projects home sales will decline 5.2% this year, with about 444,530 properties trading hands, while the national average home price is expected to edge up 0.2% on an annual basis.

Sales of existing homes in the country declined 2.3% in September from the month before, and came in 7.7% below a year earlier in non-seasonally adjusted terms, data from the association showed. New listings also resumed a downward trend after rebounding in August, declining 1.8% from a month prior.

"After a four-month run of modestly positive progress on demand, supply and prices, many of Canada's housing markets took a step back in September," said Shaun Cathcart, CREA's senior economist. He said the weakening wasn't surprising given the latest increase in fixed mortgage rates and with the Bank of Canada potentially raising interest rates before the end of the year.

Financial markets are pricing in a series of interest rate increases ahead, though economists are split on whether a move will come this year given risks to the economy. "Higher fixed-mortgage rates and a potential nudge up in variable rates--still a big if depending on what the Bank of Canada does--would only tighten the lid on the market into 2027," said Bank of Montreal Capital Markets senior economist Robert Kavcic.

Write to Robb M. Stewart at robb.stewart@wsj.com

Corrections & Amplifications

This article was corrected at 3:26 p.m. ET. The Canadian Real Estate Association projects about 444,530 properties trading hands in 2026. The original version incorrectly said sales were expected to be about 44,530.

(END) Dow Jones Newswires

October 16, 2026 09:00 ET (13:00 GMT)