Toronto's housing sector experienced a significant decline in July, with new construction starts decreasing by 69% compared to the same month last year, and seeing a 49% drop throughout the entire year to date.
In a notable development, housing starts in Canada have surged to a multi-year high in July 2025, according to the latest data from the Canada Mortgage and Housing Corporation (CMHC). The total monthly seasonally adjusted annual rate (SAAR) of housing starts in July 2025 was 294,085 units, marking a 4% increase from 283,523 units in June 2025.
The growth in homebuilding can be attributed to several factors. Rishi Sondhi, an economist from TD, states that starts in July 2025 hit the highest level since September 2022. He attributes the growth in the rental market as a key driver, where gains have likely been supported by powerful population growth and government financing programs.
Edmonton in Alberta posted a significant 36% annual increase in starts, and Calgary recorded a 22% year-to-date increase, despite falling 24% year over year for the month of July. Montreal saw a staggering 212% year-over-year increase in actual housing starts, driven by significantly higher multi-unit starts.
However, Toronto continued to struggle in July, with starts falling 69% year over year and 49% year to date, driven by a decrease in multi-unit and single-detached starts. Vancouver, despite starts rising 24% year over year, is experiencing rising vacancies, and developers are likely to pull back.
Economic uncertainty and slowed immigration are preventing new housing from being proposed and pre-sold in the current situation. Nevertheless, building permit levels suggest starts will remain sturdy in the near term. Rishi Sondhi anticipates some cooling taking place in 2026.
Tania Bourassa-Ochoa, CMHC's Deputy Chief Economist, attributes the stronger start to the year in 2025 to increased multi-unit starts in the Prairie Provinces and Québec. Nicole Lechter, senior real estate analyst with national accounting firm RSM Canada, attributes Alberta's impressive numbers in part to a lack of rent control.
Indigenous partnerships could help fill the gaps in Vancouver's housing market, as the city grapples with its housing crisis. The Canada Mortgage and Housing Corporation (CMHC) has shared that rents in some major markets are on the decline.
In conclusion, the housing market in Canada has seen a remarkable surge in July 2025, with several cities experiencing significant growth. While there are challenges ahead, particularly in Toronto and Vancouver, the overall outlook remains positive, with building activity expected to remain strong in the near term.
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