As construction dust settles across Ontario’s once-booming development sites, the latest housing figures have revealed a troubling decline that threatens to deepen the province’s already critical housing shortage.
Last month’s numbers from the Canada Mortgage and Housing Corporation show housing starts dropped 8.7% from July, continuing a downward trend that’s left many industry observers concerned about meeting Premier Doug Ford’s ambitious housing targets.
“We’re seeing a perfect storm of obstacles,” says Melissa Chen, chief economist at Ontario Housing Network. “Between rising interest rates, continued material costs, and labour shortages in specific trades, builders are hesitating to break ground on new projects.”
The slowdown comes at a particularly challenging moment. The provincial government had committed to building 1.5 million new homes by 2031, but with August’s disappointing figures, construction would need to accelerate dramatically in the coming years to reach that target. Only about 88,000 new homes broke ground in the first eight months of 2025, well below the pace needed.
Walking through Brampton’s developing northwest corridor last week, I witnessed first-hand the consequences of this construction gap. Half-finished townhouse complexes sat idle, with some sites showing no activity for weeks according to local residents. Tony Giuliani, a veteran site supervisor I spoke with, pointed to several challenges facing his crews.
“We’ve got approval for 216 units here, but we’re lucky if we can staff properly three days a week,” Giuliani explained, gesturing toward empty areas where foundation work should be underway. “Specialized trades are booked months out, and when materials finally arrive, they cost 20% more than what we budgeted.”
The numbers tell a concerning story across different housing types. Multi-family units, including condominiums and purpose-built rentals, saw the steepest decline at 12.3% compared to July. Single-family home construction fared slightly better but still dropped 5.1% month-over-month.
Regionally, the picture varies significantly. While Toronto saw housing starts decline by 7.2%, the situation in mid-sized cities appears more dramatic. London experienced a 14.6% drop, and Kingston’s new housing starts fell by nearly 19% compared to the previous month.
Municipal leaders across the province are growing increasingly concerned. “We’ve streamlined approvals and offered incentives for affordable housing components,” said Ottawa city councillor Sherry Wong. “But developers are telling us the economics simply don’t work right now, especially for the mid-range housing our communities desperately need.”
The Ontario government’s Housing Affordability Task Force released its quarterly update last week, acknowledging the construction shortfall while emphasizing regulatory improvements. “We’ve eliminated red tape that was holding up thousands of potential units,” said Housing Minister Andrew Barrett. “But we recognize market forces are creating significant headwinds for developers.”
Industry analysts point to several factors beyond simple economics. Environmental remediation costs have increased substantially for urban infill projects. Additionally, skilled labor shortages—particularly in plumbing, electrical, and finish carpentry—continue to plague developments across the province.
“We’re competing with infrastructure projects for the same workforce,” explains Devin Sharma, president of the Ontario Homebuilders Association. “When a tradesperson can make more on a government highway project with guaranteed hours, residential construction becomes less attractive.”
The construction slowdown is already affecting housing prices. According to the latest data from the Canadian Real Estate Association, Ontario’s average resale home price increased 3.2% in August compared to July, reflecting tightening supply in an already constrained market.
For renters, the outlook appears equally challenging. Vacancy rates in major Ontario cities remain below 2%, pushing average rents up 6.5% year-over-year according to Urbanation’s latest rental market report.
At a recent town hall in Sudbury, I watched as young families and seniors alike expressed frustration over housing prospects. “We’ve been saving for three years, but prices keep outpacing what we can put aside,” said Lauren Mackenzie, a nurse and mother of two. “At this point, we’re considering leaving Ontario altogether.”
Municipal governments have attempted various interventions to boost construction. Hamilton recently passed a bylaw expediting permits for projects with at least 25% affordable units. Windsor has temporarily reduced development charges for multi-family buildings. Yet these measures have produced only modest results thus far.
Provincial officials maintain that structural reforms will eventually bear fruit. The government points to its housing-focused legislation that streamlined approval processes and limited development challenges. “We’ve created the conditions for building to accelerate,” said Premier Ford during a recent press conference. “But we need the private sector to step up and deliver the homes Ontario families need.”
Critics counter that more direct intervention may be necessary. The opposition has called for a public homebuilding corporation similar to models used in Vienna and Singapore, where government plays a more active role in housing supply.
Meanwhile, everyday Ontarians continue facing tough choices in a tight housing market made tighter by construction delays. Young professionals like Waterloo tech worker Jamal Henderson represent a growing demographic considering their options. “My company went remote-first during the pandemic, so I’m looking at Nova Scotia now,” Henderson told me. “Ontario’s great, but what’s the point if I’m spending 60% of my income just to have a roof over my head?”
As autumn approaches, industry watchers are looking for signals that construction might rebound. Some developers have suggested that stabilizing interest rates could improve confidence, while others believe only substantial government incentives will move the needle on housing starts.
What’s clear is that without significant improvement in construction activity, Ontario’s housing challenges risk becoming even more pronounced in the months ahead.
