A new report from the Canada Mortgage and Housing Corporation (CMHC) concludes that Canadian housing prices would be about 10% lower and the national housing stock roughly 30% larger if the country’s homebuilding sector had kept pace with the responsiveness seen in the United States between 2006 and 2024.

The analysis, based on research from the OECD, attributes the gap largely to stricter zoning rules and land-use regulations in many Canadian municipalities, which have limited the supply of new housing in major urban areas.The report notes that U.S.metropolitan regions generally face fewer regulatory barriers, allowing housing supply to adjust more quickly to rising demand.In contrast, Canadian cities have experienced prolonged supply constraints, contributing to sustained price increases.

CMHC chief economist Mathieu Laberge also highlights structural factors, including Canada’s geography—such as mountains and waterways that restrict development in cities like Vancouver and Montreal—and the country’s smaller number of large urban centres, which reduces mobility options for residents seeking affordable housing.

Independent economist Paul Smetanin cautions that international comparisons may be imperfect due to differing regulatory systems and labour market conditions, though he agrees that construction bottlenecks are a major driver of Canada’s housing challenges.The report also points to long development timelines, often exceeding a decade, and rising costs for land, materials, and labour.Taxes and development charges account for an estimated 36% of the cost of a new home, with municipalities relying heavily on these revenues.

Despite federal and provincial initiatives to boost supply—including ambitious targets for annual homebuilding, infrastructure funding programs, and reduced development charges—the CMHC warns that housing starts remain well below the estimated 480,000 units needed annually over the next decade to restore affordability.

The report argues that increasing supply would not only ease price pressures but also generate broader economic benefits through construction activity and related industries.