Housing: February Starts Hold Steady Nationally Despite Toronto Slowdown

This morning, the Canada Mortgage and Housing Corporation (CMHC) released its comprehensive data for February 2026, revealing a national housing market that remains remarkably resilient in aggregate, despite significant localized volatility. The report indicates that the six-month trend in housing starts remained stable, with the seasonally adjusted annual rate (SAAR) of housing starts across Canada reaching 256,005 units.

While the national figure suggests a steady pace of construction, the underlying data exposes a widening gap between Canada’s major metropolitan areas. Most notably, the Greater Toronto Area (GTA) recorded a substantial decline in new projects, a trend that stands in stark contrast to the continued growth observed in British Columbia and other regions of Ontario. For those following canada headlines, this divergence marks a critical shift in where residential investment is flowing as the country moves toward the second quarter of the year.

The National Snapshot

The 256,005 units recorded in February 2026 represents a minor fluctuation from January’s figures, signaling that high-level construction activity has plateaued rather than retracted. The CMHC uses the SAAR to account for seasonal variations, providing a clearer picture of the underlying trend in the economy.

According to the CMHC’s Chief Economist, the stability in the national trend is largely driven by a sustained pipeline of multi-unit urban starts. Across Canada, urban starts decreased by a marginal 1% to 234,402 units. Within this category, multi-unit urban starts: which include apartments, condominiums, and townhouses: fell by 2% to 190,011 units. Conversely, single-detached urban starts saw a 4% increase, reaching 44,391 units.

The canadian government has maintained a focus on increasing supply to combat long-term affordability issues, yet these figures suggest that the pace of new builds is struggling to accelerate beyond the levels seen in mid-2025. While the current volume of construction is historically high, analysts suggest it remains below the threshold required to meet the federal government's stated housing targets for 2030.

Toronto’s Construction Cool-Down

The most significant takeaway from the February report is the downturn in the Toronto market. Toronto headlines have recently focused on the slowing pace of pre-construction sales, and the CMHC data now confirms that this sentiment has translated into a reduction in actual groundbreakings.

In Toronto, total housing starts saw a double-digit percentage decrease compared to both the previous month and February of last year. Industry experts attribute this slowdown to a combination of factors, including elevated borrowing costs for developers and a backlog of unsold inventory in the high-rise condominium sector. As the cost of financing remains high, many builders have opted to delay the launch of new phases until market absorption rates improve.

This localized slump in the country’s largest housing market is a point of concern for policymakers. The GTA has traditionally been the engine of Canadian residential construction. When Toronto slows down, it places additional pressure on surrounding municipalities and other provinces to maintain the national average.

Growth in British Columbia and Regional Ontario

While Toronto grappled with a decline, other regions showed significant strength. British Columbia, particularly the Vancouver area, continued to see a robust pace of new starts. This growth is partly attributed to provincial policy shifts aimed at streamlining the approvals process and incentivizing the construction of "missing middle" housing.

In Ontario, the decline in Toronto was partially offset by increased activity in secondary markets such as Ottawa and London. These regions have seen a steady influx of residents seeking relatively more affordable options than the GTA, prompting developers to pivot their focus toward these growing urban centers.

The divergence between Toronto and the rest of the province highlights a fragmented market. While the "big city" build-out appears to be hitting a wall due to price saturation and logistical hurdles, mid-sized cities are experiencing a construction boom as they play catch-up with population growth.

The Role of Multi-Unit vs. Single-Detached

The CMHC data continues to show a heavy lean toward multi-unit dwellings. Multi-family projects represented over 75% of all urban starts in February. This trend aligns with federal and provincial efforts to promote densification in urban cores to maximize existing infrastructure.

However, the slight decline in multi-unit starts this month suggests that the "condo-heavy" model of development is facing headwinds. With interest rates remaining a primary factor in project viability, the capital-intensive nature of large-scale apartment buildings makes them more sensitive to financial market fluctuations.

Single-detached starts, while a smaller portion of the total, showed unexpected resilience in February. This segment of the market is often driven by custom builds and smaller-scale developments, which may be less reliant on the large-scale institutional financing that powers the high-rise sector.

Federal Policy and Economic Implications

The canadian government has been active in deploying the Housing Accelerator Fund, a program designed to provide incentive funding to municipalities that implement systemic changes to increase housing supply. Despite these efforts, the February starts data indicates that government policy often faces a lag time before it manifests as physical construction.

From an economic perspective, housing starts are a leading indicator of future activity in the construction sector, which is a major employer in Canada. A sustained slowdown in Toronto could lead to a softening in the labor market for skilled trades within the region, even if demand remains high in the Western provinces.

Furthermore, the CMHC report noted that while starts are holding steady, the number of completions is also being closely monitored. There is a growing concern that even as new projects begin, the time required to bring a unit from "start" to "occupancy" is lengthening due to labor shortages and supply chain complexities for specific specialized building materials.

Regional Breakdown: Beyond the Big Three

While Toronto, Vancouver, and Montreal dominate the headlines, the February data provided insight into other key markets:

• Montreal: The city saw a stabilization in starts following a period of volatility in late 2025. Development activity remains focused on rental-dedicated buildings as the city deals with low vacancy rates.
• Calgary and Edmonton: The Alberta markets showed consistent growth, buoyed by strong interprovincial migration. The lower cost of land and more flexible zoning regulations continue to make the Prairies an attractive destination for residential developers.
• Atlantic Canada: Starts in Halifax and Moncton remained above historical averages, though they represent a smaller fraction of the national total.

Looking Ahead to the Spring Market

The February housing starts data serves as a precursor to the traditionally busy spring real estate season. While the "starts" measure what is being built, the market's health will also be judged by the "resale" data expected in the coming weeks.

Economists at major Canadian banks have noted that the divergence seen in the February CMHC report may become the "new normal" for 2026. As different provinces adopt different regulatory and tax environments for builders, the national housing market is becoming less of a monolith and more of a collection of distinct regional economies.

For investors and prospective homeowners, the data suggests that while the national supply is not collapsing, it is not expanding at the rate many had hoped for. The "steady" national figure of 256,005 units hides the fact that in some of Canada’s most in-demand areas, the cranes are starting to stand still.

As the Canadianist Analysis team monitors the situation, the focus remains on the upcoming Bank of Canada interest rate decisions. Any shift in the cost of borrowing will likely be the primary catalyst for either a rebound in the Toronto market or a further cooling of construction activity nationwide.

For more updates on news and national housing trends, stay tuned to our featured section and the latest episodes of The Canadianist Podcast.