Toronto is on track to record its lowest annual housing starts in three decades, according to a report released by the Canada Mortgage and Housing Corporation (CMHC). The report, published on Tuesday, highlights a significant decline in homebuilding activity in the city, particularly in the condominium sector.

In the first half of 2025, Toronto's homebuilding activity fell to its lowest per capita level since 1996. This decline was primarily driven by a staggering 60 percent drop in condominium starts compared to the previous year. The CMHC report indicated that a decrease in investor demand has negatively impacted project feasibility, resulting in cancellations and delays in construction.

"A pullback in investor demand during the first half of 2025 reduced project feasibility, leading to cancellations, delays, and a sharp drop in construction," the report stated. Many in the industry are advocating for lower construction costs and reduced development charges to improve the viability of new projects.

While rental apartment starts also saw a decline of eight percent compared to the same period in 2024, they remained above the 10-year average. The report emphasized that condominium construction has historically provided a significant portion of rental housing in the region. The slowdown in this sector raises concerns about maintaining a steady supply of rental units.

The CMHC warned that the overall slowdown in housing construction could exacerbate affordability issues in the long term, especially when economic conditions improve and demand increases. The report also noted that Vancouver experienced a similar trend, with a 13.4 percent decrease in condo starts during the same timeframe.

In contrast, other Canadian cities like Calgary and Edmonton reported positive trends in housing construction. Calgary saw a record pace of new home construction, driven by strong population growth and favorable zoning regulations. Edmonton also experienced increases in both apartment and single-detached home construction, although there were signs of a slowing pace in apartment completions due to a shortage of skilled labor.

The CMHC's findings underscore the challenges facing the housing market in major urban centers like Toronto and Vancouver, where high development charges and lengthy approval processes continue to hinder new construction. As the housing landscape evolves, the need for systemic changes to improve cost and time certainty in the building process has become increasingly urgent.