Toronto’s housing construction market is undergoing a major shift, with purpose-built rental apartments now overtaking condominium construction for the first time in more than three decades.
According to the Canada Mortgage and Housing Corporation’s Fall 2026 Housing Supply Report, rental apartment starts in the Toronto region surpassed condominium apartment starts for the first time since 1994.
Purpose-built rental apartment starts increased 82% in the first half of 2026 compared with the same period in 2025.
It was the only major housing category in Toronto to record an increase in starts.
Toronto Rental Construction Is Surging
Toronto’s construction market has historically relied heavily on condominium development.
That is changing quickly.
CMHC says purpose-built rentals have become the primary source of new housing supply in Toronto as condominium construction collapses.
Government financing programs, municipal incentives and the conversion of some planned condo developments into rental projects have helped support the increase in rental construction.
Rental apartment starts were 82% higher during the first six months of 2026 compared with 2025.
The shift means Toronto is now building more purpose-built rental apartments than condominium apartments for the first time since 1994.
Toronto Condo Construction Has Collapsed
The rental boom is happening at the same time Toronto’s condo development market is experiencing one of its sharpest slowdowns in decades.
CMHC says condominium apartment construction has collapsed because of weak presales, poor investor demand and a large supply of condos already available on the resale market.
In the City of Toronto, only 156 condominium units started construction during the first half of 2026.
For comparison, Toronto averaged approximately 7,000 condo starts per year over the previous decade.
Ground-oriented freehold construction is also at record lows following more than two decades of decline.
More Rentals Are Helping Toronto Tenants Right Now
The surge in purpose-built rental construction is already helping bring more balance to Toronto’s rental market.
More apartments becoming available can give renters more options and reduce some of the extreme competition that characterized Toronto’s rental market during the years following the pandemic.
CMHC says rental market conditions have been moving toward better balance, with vacancy rates improving and rent growth slowing.
But the agency warns that the current rental construction boom does not solve Toronto’s entire housing shortage.
Fewer Condos Could Eventually Put Pressure On Rents
Condos are not only an ownership option in Toronto.
A significant number are purchased by investors and rented to tenants, creating an important secondary rental market.
With fewer condos beginning construction today, Toronto could see significantly fewer condo completions several years from now.
CMHC warns this could reduce an important source of rental supply and eventually put renewed pressure on rents and vacancy rates.
Toronto Still Is Not Building Enough Housing
Even with record rental construction, Toronto remains far below the level of housing production CMHC says is needed to restore affordability.
CMHC estimates Toronto needs to increase annual housing starts by at least 50% over the next decade to bring affordability back to 2019 levels.
The region needs approximately 21,000 to 26,000 additional housing starts every year beyond the current projected pace.
That means the rapid increase in rentals is helping, but it is not enough to offset the dramatic decline in condo and freehold construction.
Toronto’s housing market is effectively becoming increasingly divided between strong rental construction and very weak ownership construction.
And for the first time since 1994, rental apartments are now leading the way.
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Toronto Is Building More Rentals Than Condos For The First Time In 32 Years
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Toronto rental construction has surpassed condo construction for the first time since 1994 as purpose-built rental starts jump 82%.
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Purpose-built rental starts in Toronto jumped 82% in the first half of 2026, surpassing condo starts for the first time since 1994.
References
Canada Mortgage and Housing Corporation, Fall 2026 Housing Supply Report, September 10, 2026.
CMHC Fall 2026 Housing Supply Report
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Toronto housing market, Toronto real estate, Toronto rentals, Toronto condos, Toronto rental market, Toronto condo market, Toronto housing construction, Ontario housing market, Ontario real estate, GTA housing market, Canada housing market, Canadian real estate, housing starts, CMHC, purpose-built rentals
Canada Needs To Build Up To 469,000 Homes A Year To Restore Affordability
Canada may need to build close to twice as many homes as currently projected every year for the next decade if the country wants to bring housing affordability back to pre-pandemic levels.
According to the Canada Mortgage and Housing Corporation’s latest Housing Supply Report, Canada needs approximately 417,000 to 469,000 housing starts every year through 2036 to restore housing affordability to levels last seen in 2019.
Under current trends, CMHC expects Canada to build only about 231,000 homes per year.
That leaves an annual housing supply gap of between 187,000 and 238,000 homes.
Canada Could Need Around 4.7 Million Homes Over The Next Decade
At the upper end of CMHC’s estimate, building 469,000 homes annually for 10 years would amount to roughly 4.7 million housing starts.
Even the lower estimate of 417,000 per year would amount to more than 4.1 million homes over a decade.
The challenge is that Canada’s projected construction pace is nowhere near those levels.
CMHC’s business-as-usual forecast is approximately 231,000 housing starts annually, meaning housing construction would need to increase dramatically to close the gap.
Canada Needs Roughly Twice As Much Housing Construction
CMHC says Canada still needs approximately twice as much housing construction as currently projected to restore affordability.
The agency estimates the national shortage relative to what is expected to be built at between 187,000 and 238,000 additional homes each year.
And while housing affordability has improved in some Canadian markets since 2023, CMHC warns those gains may not be sustainable.
Lower home prices, slower rent growth and weaker housing demand have provided some relief.
But if construction slows too much while the market is weaker, Canada could find itself without enough housing when demand eventually returns.
Canada’s Housing Shortage Is Increasingly About Homeownership
One of the biggest shifts identified by CMHC is the type of housing Canada is building.
Purpose-built rental construction has surged in many of the country’s largest cities.
Across major markets, purpose-built rentals now account for around two-thirds of apartment starts.
At the same time, construction of condominiums and other ownership-oriented housing has weakened sharply in places including Toronto, Vancouver, Ottawa and Montreal.
That means Canada’s housing supply gap is increasingly concentrated in the ownership market.
Toronto And Ottawa Have Some Of The Largest Gaps
The amount of additional housing required varies dramatically across Canada.
Toronto is projected to build approximately 42,000 homes annually under current trends but needs roughly 62,000 to 68,000 per year to restore 2019 affordability.
Ottawa is projected to build approximately 11,000 homes annually, while CMHC estimates it needs roughly 33,000 to 38,000.
Montreal faces an even larger gap, with a projected 22,000 annual starts compared with the 64,000 to 78,000 CMHC estimates would be needed.
The picture looks very different in Alberta.
Calgary’s construction boom has significantly reduced its housing supply gap, while Edmonton is the only large market included in the report with no measurable housing supply gap.
Housing Affordability Gains Could Be Temporary
Housing conditions have become less competitive in several Canadian markets, particularly in Ontario and British Columbia.
That has helped home prices and rents moderate.
But CMHC says the larger long-term risk is failing to build enough housing during the current slowdown.
Projects that do not start construction today will not become completed homes several years from now.
If Canada’s population and housing demand strengthen again while construction remains weak, housing shortages could quickly return.
For affordability to improve in a lasting way, CMHC says Canada ultimately needs between 417,000 and 469,000 new homes every year through 2036.
That’s nearly double what the country is currently expected to build.
References
Canada Mortgage and Housing Corporation, Fall 2026 Housing Supply Report, September 10, 2026.
Canada Mortgage and Housing Corporation, Slowing Home Construction Threatens Recent Affordability Gains, September 10, 2026.
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