Canada’s housing market showed stronger-than-expected performance in 2025, with housing starts rising 5.6% to 259,028 units, according to data released Friday by the Canada Mortgage and Housing Corporation (CMHC). The figure marks the fifth-highest annual level of housing starts on record, reflecting a resilient construction sector despite broader affordability challenges.

December Housing Starts Surpass Forecasts

In December, the seasonally adjusted annualized rate (SAAR) of housing starts increased 11% to 282,439 units, up from a revised 254,625 units in November. Economists had expected December starts to reach 260,000 units, highlighting stronger activity at year-end.

However, the six-month trend was slightly weaker, showing a modest 0.1% decline in December, indicating that momentum in housing construction slowed toward the end of the year.

CMHC Chief Economist Mathieu Laberge noted:

“While housing starts in 2025 finished ahead of 2024 and inched up in December, most of the momentum in housing construction occurred in the spring and summer. Since September, the trend in housing starts has consistently decreased.”

Government and Central Bank Support

The Canadian government, under Prime Minister Mark Carney, has emphasized policies aimed at improving housing affordability, reducing homelessness, and supporting increased home construction.

The Bank of Canada has also taken steps to bolster the housing market by lowering its benchmark interest rate to a three-year low of 2.25%, encouraging borrowing and investment in the residential sector.

Outlook for Canadian Housing

While 2025 saw strong annual gains, analysts point to slowing momentum in late 2025 as a sign that builders may face headwinds from affordability constraints and rising costs. The government and central bank interventions, however, are expected to support continued housing activity in 2026, particularly in urban and high-demand regions.

The combination of low interest rates, government incentives, and steady construction activity could help Canada maintain its housing starts at near-record levels while addressing critical housing supply challenges.