Canada’s new home construction market has experienced fluctuation in recent years. It has been affected by the global pandemic and more recently with higher interest rates, labour shortages, and rising construction costs. At the same time, with an increasing population, there is strong demand for housing. 

In this article, we explore the statistics around new home construction in Canada. You will find details on current and historical new home construction, regional variations, and challenges facing the construction of new homes in Canada. 

New Home Construction Statistics for Canadians

  • The value of new residential building permits reached a total value of $8 billion in April 2024.
  • New home starts were up by 10% in May 2024 compared to the previous month. 
  • Building of new homes was up by 2% in 2023 compared to 2022. 
  • Regionally, Toronto and Vancouver have seen the biggest increases in new home starts, up 10% and 15%, respectively between 2024 and 2023. 
  • The number of new detached homes being built fell by 20% in Canada in 2023. 
  • The number of multi-unit buildings being constructed in Canada increased by 7% in 2023. 
  • Residential construction costs increased by over 1% in the first quarter of 2024. 
  • It is estimated that the construction industry in Canada will have a recruitment gap of approximately 85,500 workers by 2033. 

Building Permits in Canada

According to Statistics Canada, the total value of residential building permits grew by 20.5% in April 2024 to $8 billion. The total number of building permits, including residential and non-residential permits, grew to the highest level since June 2023. 

The growth in the residential sector was driven by the highest levels of multi-unit building construction on record. Building permits for multi-units increased by 32.6%, totalling $5.4 billion. At the same time, the value of permits for single-family detached homes totalled $2.6 billion after 2.4% growth. 

British Columbia led the growth in the value of permits for multi-unit components. The value increased by 75.2% or $796.3 million and reached $1.9 billion in April 2024. This was the new record, surpassing June 2023 when the value reached $1.5 billion. Ontario saw the next biggest growth of 31.9% or $442.9 million. The growth in Ontario was driven by multi-unit construction in the biggest cities.

Across the country, only 4,300 new single-family detached homes were authorised in April 2024 compared to 22,600 permits for multi-unit dwellings. This was an all time high in Canada with British Columbia recording almost a third of the permits, with 7,200 new multi-unit buildings authorised in April. 

New Home Starts in Canada

The beginning of 2024 saw some decline in the number of new home starts. According to the Canada Mortgage and Housing Corporation (CMHC), the seasonally adjusted annual rate (SAAR) on new home starts experienced a 7% decrease in March 2024 compared to February 2024, with 242,195 units in March and 260,047 units in February.

However, the number of house starts was up by 10% in May 2024 compared to April 2024, with 264,506 units and 241,111, respectively. Over the previous six months, the number of home construction starts increased by 3.8% despite the decline at the start of the year. 

Housing Starts in 2023

In 2023, the total number of housing starts in Canada was around 257,000. This was a modest 2% increase compared to the 2022 total of approximately 262,000 units. 2022 also saw a 2% increase compared to the previous year, when approximately 256,000 housing starts were recorded. 

Regional Variations

There are significant regional variations in the new home construction market in Canada. These variations are driven by demographic trends, diverse economic conditions, and local policies across the provinces and territories. 

In Ontario, especially in the Greater Toronto Area, demand for homes outstrips the supply because of the rapid increase in population. In 2023, there was a 10% increase in housing starts compared to 2022. This increase was largely due to the increased demand for multi-unit residential buildings such as apartment complexes and condominiums. There is a similar situation in British Columbia where the Vancouver metropolitan area has seen robust housing construction activity. In March 2024, the number of housing starts was up 15% compared to March 2023 driven by the construction of multi-unit buildings. 

In Quebec, the situation has been quite different with a 1% decrease in new home starts in March 2024 compared to March 2023. This is mainly because there are fewer multi-unit developments being built in the province. However, Quebec is focusing on creating more affordable housing projects to provide homes for the province’s growing population and address the home shortage in urban areas. 

Among the Prairie provinces, Saskatchewan and Manitoba have experienced some growth in the number of new homes. Meanwhile, Alberta has seen more changes in the number of housing starts because of the impact the fluctuating energy prices and employment levels have on the province’s housing market. 

Atlantic Canada has a smaller housing market and it is less prone to fluctuations than other Canadian regions. However, there has been growing construction activity in cities such as Halifax because of urbanisation and population growth and the region has seen year-on-year growth in housing starts. 

Types of New Homes

There has been a noticeable decline in the construction of single-family detached homes in Canada. This is largely because of the higher interest rates leading to affordability issues. In 2023, the number of new detached houses being built in Canada decreased by 20%. 

In contrast, the number of new multi-unit buildings housing condos has risen in Canada, especially in large metropolitan areas. In 2023, the number of multi-unit properties increased by 7% across the country. 

What Factors Influence National New Home Construction Trends?

There are a range of factors that influence the construction of new homes in Canada such as economic conditions, market dynamics, and government policies. One of the main factors is the economic conditions including economic conditions and economic growth. For example, when the interest rates are lower, borrowing is cheaper and stimulates the demand for new homes. 

Another economic factor that affects the rate new homes are built is the general economic health of a country. When the economy is strong and unemployment rates are low, it increases consumer confidence and purchasing power, which leads to a higher demand for new homes. In contrast, high unemployment rates generally reduce demand as consumers have to be more cautious about borrowing large amounts of money. 

Market dynamics, referring to factors such as demographic trends and consumer preferences will also have an impact on the construction of new homes. For example, Canada has a growing population which increases the demand for new homes, especially in urban areas, while changing household sizes affect the types of new homes needed. 

In addition, government policies and regulations are also likely to influence the building of new homes. For instance, the federal and provincial governments have created incentives to simulate the building of new homes and the CMHC has programmes to support the development of affordable housing, while tax incentives for developers can encourage more new building work. 

Increased Construction Costs

One of the main challenges to the construction of new homes in Canada is the rising cost of building materials. According to a report from the first quarter of 2024, the construction costs were still rising but they rose at the slowest rate since 2020. In the final quarter of 2023, construction costs in the residential building sector increased by 1.1% and then by 0.8% in the first quarter of 2024. 

The year-over-year construction costs in the residential sector were by up 5.2% in the first quarter of 2024. The costs increased more than in the non-residential sector where the rise was 4.6%. The residential construction costs rose the most in Halifax, where they increased by 8.1%. 

Halifax also experienced the highest quarterly increase together with Calgary. In both regions, the quarterly increase in construction costs was 1.8%. The smallest increase was in Ottawa, where the residential construction costs increased by 0.1% only. 

According to Statistics Canada, the cost of building a detached house rose by 1% and the cost of building townhouses by 0.8%. Across the different residential construction divisions the cost of masonry and earthworks increased the most, both by 2.3%, in the first quarter. There were two divisions where the costs went down: conveying equipment by 0.3% and electrical by 0.1%. 

Labour Shortages

Another challenge the construction industry needs to deal with is labour shortages. The construction industry is expected to need around 351,800 workers by 2033. This number will be needed to fill the vacancies created by approximately 263,400 workers retiring (about 21% of the industry’s current labour force) and by growing demand creating an additional 88,000 vacancies. It is estimated that there will be a gap of around 85,500 workers by 2033. 

One of the ways to address labour shortages within the construction industry is to diversify the workforce. There were about 210,800 women working in the industry in 2023 with only 28% of them working on construction sites. In total, women accounted for only 5% of the workforce on building sites. 

Another under-represented group in the Canadian construction industry are the Indigenous Peoples. In 2021, they represented only 5.1% of the construction labour force in Canada. However, this is slightly higher than the 4.1% across the overall labour force. Recruiting more women and Indigenous People would help to fill the gap in the labour force. 

Conclusion

The number of new homes built in Canada fluctuates from year to year because the industry is heavily affected by a wide range of factors including cost of materials, labour shortages, interest rates, and building regulations. Over the years, the type of new homes being built has also changed in Canada because of demographic changes and urbanisation. 

Despite the challenges facing the new home construction sector, there is rising demand for new homes, especially affordable ones in urban areas. To support the building of new homes and help people to get on the property ladder, the federal and provincial governments offer incentives ranging from the development of affordable housing to tax incentives. 

Frequently Asked Questions

The number of new homes has been recorded in Canada since the late 1940s. The number of new homes being built fluctuates from year to year depending on a range of factors such as interest rates and employment rates which affect the affordability of new homes. In May 2024, there were over 264,000 new home starts in Canada.

In Canada, the number of new multi-unit construction projects has increased, especially in urban areas in response to population growth and changes in household structures.

There are several factors that pose challenges for the construction of new homes in Canada ranging from interest rates, employment rates, local building regulations, rising cost of construction, and labour shortages.