Recent data on housing construction reveals several trends that could impact real estate market dynamics. Overall housing construction is slowing, as indicated by year-over-year declines in both general and condo starts, but rental-focused projects are surging, now making up a record share of new unit starts.
Nationally, housing starts slipped 4.3% month-over-month in January, reaching an annualized figure of 229,000. On a year-over-year basis, however, the drop was more noticeable, as total housing starts fell by 19.2%, with condos experiencing an even more dramatic decline of 52.7%, which was the lowest level of condo starts for any 12-month period since 2011, according to an Edge Realty Analytics report in March. In major cities like Toronto and Vancouver, the downturn is even more pronounced, with Toronto’s overall starts dropping by 68% year-over-year and Vancouver’s by 47%.
Despite these significant declines in overall new construction, the rental market tells a different story. Last month, rental units accounted for 51% of all unit starts. In 35 years, rental projects have never made up more than half of all housing starts in any single month, according to the report. The CMHC reported a record 147,000 purpose-built rental units under construction, which would be approximately 6% of the existing rental stock.
This high supply of rental units may have impacts. Some regional markets are particularly impacted. For example, Atlantic Canada has rentals under construction equivalent to nearly 13% of the existing rental stock. This also comes at a time when three out of the four Atlantic provinces saw population declines. From October 1, 2024, to January 1, 2025, Newfoundland and Labrador saw a decline of 0.1%, while both Prince Edward Island and Nova Scotia recorded slight decreases that rounded to 0%.
Overall, the current housing market landscape is split: while the percentage of rental projects is on the rise, other types of new supply are contracting.
