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Lower housing starts forecast in 2024

After reaching historically high levels in recent years, housing starts in Canada are expected to decline in 2024, before recovering in 2025 and 2026, reflecting the lagged effect of higher interest rates on new construction. This according to the latest Housing Market Outlook (HMO) released by Canada Mortgage and Housing Corporation (CMHC). The HMO provides overviews and forecasts for new home construction, rental markets, home sales and home prices. Along with a national overview, this version of the HMO also provides data and forecasts for Vancouver, Calgary, Edmonton, Toronto, Ottawa, and Montréal. A second version of the HMO, covering 12 more CMAs in Canada, will be released on May 1st.

Despite an increase in rental housing coming on the market in 2023, supply is not forecast to keep up with demand, resulting in higher rents and lower vacancy rates throughout the forecast period. CMHC anticipates a decrease from record-high rental apartment construction observed in recent years, with demand continuing to be driven by renter households staying in their units due to the high costs of transitioning to homeownership. Strong population growth is another factor putting pressure on rental markets.

In the homeownership market, both home prices and sales are forecast to rise in 2024. By 2025, prices could reach the peak levels recorded in early 2022 and surpass them in 2026, driven by high demand. Home sales will rebound in 2024, but will remain below the record 2020-21 levels, restricted by affordability challenges among prospective buyers.

You can read the entire Housing Market Outlook (HMO) on the CMHC website.