Canada's Housing Shortage: How Many Homes Canada Needs and Why It Can't Build Faster

Canada’s housing shortage is measured against a goal: how many homes would have to be built for prices and rents to return to an earlier level of affordability. CMHC publishes the most widely cited estimate, and it updates that estimate each year. This page covers what the estimate says, where the gap is largest, why construction can’t simply speed up, and what governments are doing about it. The monthly construction numbers are on the Canadian housing starts page, and the wider set of causes behind high prices is in the housing crisis explained.

How many homes Canada needs

CMHC’s Fall 2026 Housing Supply Report (published September 10, 2026) estimates that Canada needs 417,000 to 469,000 housing starts a year to restore affordability to its 2019 level by 2036. If current trends continue (CMHC’s “business-as-usual” scenario), Canada would build about 231,000 homes a year.

The difference is the housing supply gap: 187,000 to 238,000 homes a year over the next decade. In CMHC’s words, Canada “still needs roughly twice as much housing construction as is currently projected.” The range comes from different assumptions about how strongly buyers and renters respond when prices fall.

For scale, Canada started 259,028 homes in 2025, which CMHC called the fifth highest annual total on record. That total is 38% below the low end of the range CMHC says is needed. The most recent monthly pace is on the housing starts page.

How the estimate has changed

CMHC’s earlier reports set a different target. In 2022 and again in 2023, it estimated Canada would need about 3.5 million more homes than it was on track to build by 2030 to bring affordability back to levels last seen around 2004. That figure is still widely quoted.

In 2025 CMHC changed the method. It said restoring affordability “last seen two decades ago is no longer realistic” after the pandemic surge in housing costs, moved the target to 2019 levels, and switched to a rolling ten-year horizon. Its 2025 estimate was 430,000 to 480,000 starts a year to 2035; the current estimate runs to 2036. The two kinds of figure measure different things: the old one is a total number of extra homes by a deadline, the new one is a yearly building pace.

Where the gap is largest

CMHC’s report breaks the estimate out for the six largest census metropolitan areas. The table lists them in alphabetical order.

Relative to what each city is expected to build, the gaps differ widely: Montréal’s low-end gap is 191% of its expected starts and Toronto’s 48%. Toronto’s monthly construction figures are on the Toronto housing starts page.

Rentals are being built, ownership homes less so

CMHC’s Fall 2026 Housing Supply Report found that “across Canada’s major markets, except for Calgary and Edmonton, new housing supply is dominated by rentals, with ownership-oriented housing starts weakening considerably in recent years.” New purpose-built rentals have moved some rental markets toward more balanced conditions, but CMHC expects “a future supply crunch in the homeownership market.” Its deputy chief economist put the risk this way: “The key risk now is Canada underbuilds during this softer market and finds itself further short of housing when demand strengthens again.”

Why Canada can’t build faster

CMHC’s view is that doubling construction is possible but needs changes on several fronts at once. When it released its 2025 estimate, its deputy chief economist said doubling the pace “is achievable, but not without a significantly larger and modernized workforce, more private investment, less regulation, fewer delays, and lower development costs,” and that it “will also require significant innovation in construction technology and growth in labour productivity.” Each of those is a bottleneck in its own right:

• Approvals and zoning. Rezoning, site plan approval and permits come before a single start is counted, and each step can add months or years. Where most residential land allows only detached houses, anything denser needs its own approval first.
• Labour. Building more at once needs more trades workers, and training them takes years.
• Development costs. Municipal development charges, land, materials and labour all feed into the price a project must sell or rent for. Where that price is above what local buyers can pay, the project doesn’t start.
• Financing and sales. Homes built for sale have to find buyers. In Vancouver, CMHC reports that more developers “are favouring projects supported by rental-focused policies and financing over homeownership projects that have struggled to sell in recent years,” and in its review of 2025 CMHC said economic uncertainty and “the diminished viability of large residential towers encouraged a shift towards smaller-scale projects.”
• Time. A project approved today adds homes only after construction, which for a large building takes years. CMHC calls closing the gap “a marathon, not a sprint” for that reason.

Government supply programs

Most federal measures aim at the cost and speed of building rather than at demand:

Zoning and approval rules themselves are set by provinces and municipalities. Demand-side rules, such as the foreign buyer ban, are covered on their own pages.

Can the gap close?

Not quickly, on CMHC’s numbers. Closing it means building at roughly twice the pace current trends point to, every year for a decade, while the industry works through the bottlenecks above. CMHC research cited with its 2025 estimate found the industry “has the potential capacity to build more than 400k new homes per year,” and CMHC put the condition plainly: “Systemic changes are essential if we are to double the pace of homebuilding in Canada.”

Slower population growth works in the other direction. CMHC said in its Fall 2026 Housing Supply Report that “slower population growth has brought some improvements in affordability,” but that new construction is slowing faster than demand. A smaller gap in a soft market can widen again when demand picks up.

Shelter costs and inflation

Housing supply also reaches the inflation rate. Shelter is one of the eight major components of the Consumer Price Index, with a weight of 28.3% in the 2025 basket (used from the May 2026 CPI). It includes rent, mortgage interest cost and homeowners’ replacement cost, among other items.

In September 2026, shelter prices changed by 1.8% over 12 months and rent by 2.8%, against 3.1% for all items, so shelter inflation was below the overall rate that month.

Home prices and interest rates enter the index slowly. Statistics Canada explains that the house prices used in the mortgage interest cost index “represent the weighted average house price of the previous 25 years,” and that “new interest rates only affect the index through mortgages newly initiated or renegotiated.” So a shortage that keeps prices and rents high feeds into measured inflation gradually: rent shows up month by month, and mortgage interest as homeowners take out new mortgages or renew. The latest CPI figures are on the inflation rate page.

What the shortage means for buyers and renters

For buyers, how forecasters expect prices to move is covered in how much home prices will increase, and the programs available to new buyers are in the first-time home buyer guide. For renters, CMHC says new rental supply is moving markets toward more balanced conditions and “providing some relief for renters”; current rents and vacancy rates by city are in the rental market section.

Related pages

• Canadian housing starts: CMHC’s latest monthly starts by province and city
• Toronto housing starts: construction in the Toronto CMA
• The housing crisis explained: causes and the policy response
• Housing affordability in Canada: how affordability is measured now
• More housing market analysis