CMHC's Fall 2026 Housing Supply Report, released on September 10, leads with a national number that hasn't changed much from last year. Canada needs roughly 417,000 to 469,000 housing starts a year to bring affordability back to pre-pandemic levels by 2036. At current trends it is on track for about 231,000.[1][2] That leaves an annual gap of 187,000 to 238,000 homes.[2]

The national figure gets the headlines. The Ontario detail is more useful, because it shows the two largest Ontario markets moving in opposite directions, and for reasons that matter to anyone in rental housing.

Toronto: a narrower gap, but not a healthier one

CMHC says Toronto's supply gap narrowed. The reason isn't more building. Lower home prices improved affordability, which shrank the distance to 2019 levels.[2] Construction itself has weakened sharply.

CMHC's Toronto numbers:[2]

  • Current-trend starts of about 42,000 a year, compared with 62,000 to 68,000 needed. That's a gap of 20,000 to 26,000 homes a year.
  • Starts adjusted for population in the first half of 2026 were the lowest since 1996, apart from 2025.
  • The stock of permitted units waiting to start has fallen 50% from its 2023 peak.
  • In the City of Toronto, only 156 condominium units started in the first half of 2026, against an average of about 7,000 a year over the previous decade.

The one segment that grew was purpose-built rental. Rental apartment starts rose 82% in the first half compared with 2025, and outnumbered condo apartment starts for the first time since 1994. CMHC credits government financing programs, municipal incentives and some condo projects switching to rental.[2]

Ottawa: building a lot, still falling behind

Ottawa's story runs the other way. Construction is strong, but CMHC says affordability got worse because of higher mortgage rates and slower income growth, so the gap widened.[2] It now needs 22,000 to 27,000 more starts a year than its current trend of about 11,000.

Rental dominates Ottawa's pipeline even more than Toronto's. Rental units made up 54% of starts in 2026, compared with 12% for condo apartments. Rentals also accounted for 64% of completions and 69% of units under construction, up from 30% in 2023. Rental apartment starts rose 3% while condo apartment starts fell 49%.[2]

CMHC notes that Ottawa has approved participation in Ontario's Development Charge Reduction Program, and that a new city-wide zoning by-law allows up to four units as of right on most serviced residential lots.[2]

The real risk is in ownership

Across Toronto, Vancouver, Montreal and Ottawa, CMHC's conclusion is the same: rental construction is carrying new supply, and the shortfall is increasingly in ownership housing.[1] Purpose-built rental now makes up about two-thirds of apartment starts in the key markets CMHC tracks.[2]

For rental owners, that has two effects that point in different directions:

  1. Near term: more competition. Record rental completions and starts are bringing rental markets toward balance. CMHC says easing is most visible in newer, more expensive units.[2]
  2. Longer term: less secondary supply. Investor-owned condos have long been a big source of rental housing in Toronto. CMHC warns that slowing condo completions will reduce that supply in the coming years, putting renewed pressure on rents and vacancy.[2]

CMHC's view is that the greater long-term risk is not too much rental construction, but too little condo and ground-oriented housing when demand returns.[2]

Demand is expected to come back

The report also expects demand to be weak for about two years. Lower immigration targets and fewer temporary residents will slow population growth, and buyers and investors will stay cautious. Over the longer term, CMHC expects population growth to recover, incomes to rise and some delayed household formation to return.[2]

That sets up a timing mismatch. Developers make decisions based on near-term demand and financing, while CMHC measures need over ten years. If starts stay low through the soft period, the shortage could reappear when demand picks up.

What it means for Ontario rental

The report supports three practical points for the rental sector:

  • Lease-up conditions will stay competitive while today's large pipeline completes, especially for higher-rent new units.
  • The condo collapse is a future rental story. Fewer condo completions mean fewer investor-owned rentals in 2028 and beyond.
  • Policy support is doing a lot of the work. Financing programs, development charge relief and zoning reform are keeping rental projects viable. Changes to any of them would show up quickly in starts.

The national gap number will likely be quoted for the next year. For Ontario rental, the shift in where the gap is matters more than its size.

Sources

[1] Slowing home construction threatens recent affordability gains, CMHC (Sept. 10, 2026): https://www.cmhc-schl.gc.ca/media-newsroom/news-releases/2026/slowing-home-construction-threatens-recent-affordability-gains

[2] Fall 2026 Housing Supply Report, CMHC (Sept. 10, 2026): https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-supply-report