Canadian real estate developers are pulling back, even as policymakers flood the system with incentives. Statistics Canada (Stat Can) data shows residential building permit values plunged in August, and the drop was even larger after adjusting for inflation. Canadian homebuilders are sending a clear warning signal: the risk is rising even faster than the astronomical budgets for homebuilding incentives.
Canadian Homebuilding Intentions Plunge—Inflation Makes It Worse
Canadian residential building intentions faded further. The seasonally adjusted value of residential permits fell 2.4% (-$173.8M) to $7.01B in August, 4.6% (-$337 million) lower than last year. It looked even worse after adjusting for inflation, the value fell 7.9% (-$559 million) from last year. Homebuilders are planning fewer homes, as weakening demand and rising costs squeeze budgets.
Canada’s Single-Family Building Intentions Crater, Multi-Family Declines Just Getting Started
Canadian residential real estate building intentions: Residential building permit values in billions of dollars.
Source: Better Dwelling.
Canadian homebuilding intentions faded much faster when it came to single-family homes. Single-family permits fell 4.3% (-$112.3M) to $2.49B in August, marking a 10.5% drop from last year. It marks the weakest August since 2019, before the builder boom—in nominal terms. Inflation-adjusted it was the weakest for the month in at least 7 years, the length of the available data. In fact, only two months came in lower in the total dataset—June 2025 and April 2020.
It’s a market that resembles the early days of the pandemic—when uncertainty froze activity. Except now, affordability is strained across the country—with no obvious place to escape to. Even a condo in Halifax is approaching Toronto prices.
Multifamily has been relatively resistant but recent data suggests the segment may turn soon. Permit value for the segment slipped 1.3% (-$61.5M) lower to $4.52B in August, about 1% (-$44.7M) lower than last year. It’s worth noting that December 2024 appears to have been the peak, with August 2025 coming in 28.7% (-$1.69B) lower. The sudden shift is occurring even with a strong narrative around the subsidies flowing into the purpose-built rental boom.
Ontario and Alberta Led The Way Lower, BC & Quebec Show Growth
Canadian homebuilding intentions faded in all but a few provinces—though they weren’t enough to buoy the national volume. The decline was led by Ontario (-$432.8M), and Alberta (-$311.1M), tempered by gains in B.C. (+$331.4M), and Quebec (+$155.5M). The latter gains were driven by institutional and multi-family building, which doesn’t carry the same positive read as consumer-driven demand.
The sharp erosion in building intentions is even worse than it looks. The nominal decline is substantial on its own, but the inflation-adjusted data reveals a real decline of investment. Developers are taking a step back even as policymakers flood the market with building incentives, an ominous sign indicating risk is rising much faster than even these generous incentives.
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