OTTAWA - The Parliamentary Budget Officer (PBO) has released a report indicating that Canada must construct 3.2 million new homes over the next ten years to effectively close the existing housing gap. However, the country is currently not on track to meet this target.

The PBO's latest findings suggest that the number of new home constructions will increase over the next three years. After this period, the rate of new builds is expected to gradually return to historical averages. The report projects an average of 227,000 new homes will be completed each year for the next decade.

In addition to the construction forecasts, the PBO anticipates a significant decline in the formation of new households. This decline is attributed to recent cuts in Canada's immigration targets. The combination of increased home construction and reduced demand is expected to help alleviate the historically low vacancy rates that have contributed to rising home prices in recent years.

Despite the anticipated increase in construction, the PBO estimates that only about 2.5 million homes will be built in the next decade. This figure falls short of the 3.2 million homes deemed necessary to close the housing gap.