Canada Mortgage and Housing Corp.(CMHC) has issued a forecast predicting a significant decline in housing construction over the next two years, despite government claims of accelerating homebuilding efforts.

The agency projects annual housing starts will drop by 7% this year to 241,400 units, with further declines expected to 223,400 units in 2027 and 211,900 units in 2028.Key factors cited include the U.S.-China trade war, buyer hesitation, rising construction costs, a surplus of unsold condos, and slowing population growth.

Deputy Chief Economist Kevin Hughes highlighted heightened uncertainty for both businesses and households due to geopolitical tensions and economic instability.

The report contrasts with Prime Minister Mark Carney’s November budget plans to double housing construction rates, noting that prolonged trade disputes and Middle East conflicts have created unpredictability for developers.

Regional impacts are particularly pronounced in Ontario and British Columbia, where high real estate prices and rental costs persist despite recent price drops.

CMHC warns affordability issues and slower population growth will keep sales low in these provinces, with specific forecasts of declining sales in Vancouver and Victoria.Government interventions include funding to help municipalities reduce development fees and support developers in clearing inventory.The analysis underscores a complex interplay between economic factors, policy responses, and market dynamics shaping Canada’s housing landscape.