The following piece by ICBA Chief Economist Jock Finlayson first ran in The Toronto Sun on Wednesday, October 7, 2026.
The Carney government says it wants housing starts in Canada to double to 500,000 per year within the next several years.
At first glance, it’s an odd goal for the government to embrace. More than four-fifths of the existing residential housing stock in Canada consists of “market housing” — units constructed by developers and homebuilders guided by market-based signals. These signals include housing demand and business objectives such as making a profit, keeping the firm’s workers employed, etc.
Ottawa’s direct role in building the country’s housing stock has been minor.
If markets operate well, the supply of housing will adjust in the face of trends in demand. Unfortunately, the homebuilding industry is subject to a heavy dose of regulation — mainly by municipalities and the provinces — and must grapple with a plethora of taxes and fees that drive up construction costs. Government taxes and regulatory processes commonly cause higher costs and lengthy delays in completing projects. As a result, there’s often a lag between the demand and the availability of new supply, leading to upward pressure on all housing prices in a region — not just the prices of new units coming to market.
Carney’s 500,000 target grew out of analytical work done by the Canada Mortgage and Housing Corporation (CMHC) following the pandemic. Housing demand and prices both increased significantly post-2020, elevating the issue of “housing affordability” to the top of the political agenda. This prompted CMHC to study how much new housing supply is needed to restore “affordability” to pre-COVID (2019) levels by the mid-2030s.
CMHC defines “affordability” based on mortgage payments plus property taxes and utility costs (on average) eating up no more than 30% of average household income before taxes. By that metric, most of Canada’s major metro areas were and still are “unaffordable,” even after a few years of sluggish housing markets and softening sale prices. Because housing starts were insufficient to account for growth of the population and in the number of households in the decade prior to the pandemic, CMHC has argued Canada continues to have a “housing supply” gap.
However, as it turns out, housing starts have been declining since 2024. In 2025, starts reached 259,000, barely half of the federal target. For 2026, TD Economics predicts starts will drop to 242,000 before dipping further to 226,000-230,000 over 2027-28. This pattern casts doubt on feasibility of the 500,000 goal.
Apart from fewer housing starts since 2024, there are major obstacles to sharply dialling up homebuilding quickly. One is the slowdown in population growth following the supercharged population gains of the 2021-24 period. This will keep housing demand on a lower trajectory for some time.
A second constraint involves the supply of construction labour, with Deloitte recently estimating Canada would need another 290,000 construction workers to double the pace of homebuilding by 2030. It will be all but impossible to train up that many new skilled workers within such a short period.
A third factor is the time (and related costs) required to obtain approvals and permits to construct new housing in many Canadian cities, coupled with resistance to “densification” by residents in some communities.
Finally, the cost of homebuilding has skyrocketed in Canada, jumping by 70% between 2019 and mid-2026, according to Statistics Canada. Coupled with high financing costs and burdens imposed by government regulations and permitting processes, this prevents many multi-family projects from proceeding.
The Carney government’s target of 500,000 annual housing starts is best understood as a political talking point rather than a realistic policy objective.