Ontario’s housing supply problem could get worse before it gets better.
According to CMHC’s 2026 Housing Market Outlook, overall housing starts in Ontario are projected to fall to near two-decade lows in 2026, largely because of very weak condominium pre-construction sales.
That could create a major challenge for affordability, especially in a province already struggling with high home prices, elevated rents, and a shortage of suitable housing.
Ontario Housing Starts Are Expected to Drop Sharply
CMHC says Ontario housing starts are expected to fall near 20-year lows in 2026.
Housing starts refer to the number of new homes where construction has officially begun. They are an important measure because they show how much new supply is entering the pipeline.
When starts fall, fewer new homes are likely to become available in future years.
For Ontario, that matters because the province already needs significantly more housing to keep up with long-term demand.
Weak Condo Pre-Construction Sales Are a Major Factor
The biggest drag on Ontario’s new housing supply is the condo market.
CMHC says the decline is being driven by very low condominium pre-construction sales. In Toronto specifically, condo pre-construction sales fell to multi-decade lows in 2025, making it harder for developers to launch new projects.
This is important because many condo projects depend on strong pre-sales before construction can begin.
If buyers and investors are not purchasing enough units before construction, projects may be delayed, paused, or cancelled.
Developers Are Finishing Existing Projects Instead
CMHC says many developers are now focused on completing projects that are already underway rather than starting new ones.
That means Ontario may still see some new units delivered in the short term, but the future pipeline could weaken.
This creates a lag effect.
The housing market may still receive supply from past projects, but fewer new starts today can mean fewer completions in the years ahead.
Toronto’s Condo Market Is at the Centre of the Slowdown
Toronto is one of Canada’s largest condo markets, so weakness there has a major impact on Ontario’s overall housing starts.
High borrowing costs, weaker investor demand, elevated condo inventory, and affordability concerns have all made it harder for new condo projects to move forward.
For buyers, this could eventually mean fewer new condo options.
For renters, it could also matter because many condo units have historically entered the rental market through investor-owned units.
A Modest Rebound Is Expected in 2028
CMHC does not expect the weakness to last forever.
The agency says Ontario housing starts are expected to see a modest rebound in 2028.
However, that means the province may face a difficult period in the meantime, with slower construction activity and a weaker new-home pipeline.
Why This Matters for Affordability
Ontario’s affordability problem is often discussed in terms of demand, interest rates, or buyer income.
But supply is just as important.
If fewer homes are built, the province may continue facing:
- Limited housing options
- Pressure on resale prices
- Tight rental conditions over time
- Less choice for first-time buyers
- Slower progress on affordability goals
Even if demand weakens temporarily, a lack of new supply can make affordability harder to improve in the long run.
What This Means for Buyers
For buyers, fewer housing starts could mean less new inventory in future years.
That could be especially important for:
- First-time buyers looking at condos
- Buyers hoping for more new-build options
- Investors watching the condo market
- Families looking for more housing choice
If fewer projects launch now, buyers may have fewer options later.
What This Means for Developers
For developers, the outlook highlights how difficult the current environment has become.
Many projects are being squeezed by:
- High financing costs
- Weak pre-construction demand
- Lower investor confidence
- Construction costs
- Slower sales
- More difficult project financing
This is especially challenging for condos, where pre-sales are often needed before lenders will finance construction.
What This Signals for Ontario’s Housing Market
CMHC’s outlook points to a major supply risk in Ontario.
The province needs more housing, but one of its biggest new-home pipelines – the condo sector – is under pressure.
For the housing market, this suggests:
- New supply may slow in the near term
- Condo construction could weaken further
- Affordability may remain difficult
- Future inventory could become tighter
- A full supply recovery may take years
Ontario’s housing market may not just be facing a demand problem. It may also be facing a construction pipeline problem.
What This Signals for Toronto
Toronto is likely to feel this issue more than most Ontario markets.
As Canada’s largest condo market, Toronto depends heavily on multi-unit construction to add new homes.
If condo starts fall sharply, the city could face fewer new units later this decade, even as long-term demand remains high.
For now, Toronto’s condo market remains under pressure. But if construction slows too much, today’s weakness could turn into tomorrow’s supply shortage.
References
Canada Mortgage and Housing Corporation. (2026). Housing Market Outlook 2026.
https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook
Canada Mortgage and Housing Corporation. (2026, March 11). Spring 2026 Housing Supply Report.
https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-supply-report
Money.ca. (2026, February 20). Housing starts set to slow through 2028 as demand weakens.
https://money.ca/real-estate/housing-starts-set-to-slow-through-2028
iPolitics. (2026, March 16). Housing starts expected to decline through 2028, CMHC says.
https://www.ipolitics.ca/2026/03/16/housing-shortage-build-canada-homes-cmhc/
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