Canadian Housing Starts: Navigating Regional Volatility to Find Resilient Markets

The Canadian housing market is a tapestry of contradictions. While June 2025's housing starts data surprised economists with an unexpected 0.4% monthly rise to a seasonally adjusted annual rate (SAAR) of 283,734 units, this uptick masks deeper regional divides and structural headwinds. Investors seeking stability must look past short-term noise to identify pockets of resilience—where strong fundamentals are outweighing broader market softness.

The Regional Divide: Winners and Losers in Real Time

The June data reveals a stark geographic split. Quebec and Prairie provinces (Manitoba and Alberta) drove the gains, with starts surging 10,000 and 6,200 units respectively. Quebec's urban multi-unit starts—driven by growing cities like Montreal—accounted for much of this momentum, while Prairie provinces benefited from energy sector recovery and labor demand. Meanwhile, British Columbia's starts plummeted 15,400 units, a reflection of overbuilt markets and cooling demand in cities like Vancouver. Atlantic Canada also faltered, with Newfoundland and Labrador leading declines.

This divergence underscores a critical truth: regional economic health, not national averages, dictates housing resilience. Investors should prioritize provinces with job growth, immigration inflows, and undersupplied housing markets—Quebec and the Prairies fit this profile—while avoiding regions like BC, where overbuilding and falling rents (down 0.7% in June 2024) signal oversupply.

Urban Multi-Unit: The Safe Bet in a Volatile Market

The June data also highlights a shift in housing type preferences. Urban multi-unit starts (apartments, condos) rose to 217,300 SAAR units, while single-detached starts fell to 42,500—a 2,000-unit swing. This aligns with long-term trends toward denser urban living, particularly in cities with constrained land availability and rising populations. The six-month moving average of housing starts, now at 243,407 units (up 0.8% from April), further suggests stabilization in multi-unit construction.

Multi-unit developments offer two key advantages for investors:
1. Demand Stability: Urban renters and first-time buyers increasingly prioritize affordability over single-family homes.
2. Cost Efficiency: Multi-unit projects leverage economies of scale, mitigating risks from rising construction costs (a national challenge).

Structural Headwinds: The Cloud on the Horizon

Despite June's uptick, long-term risks remain. Falling population growth, soft resale markets, and high construction costs (up 4% year-over-year in some regions) could limit future growth. The New Housing Price Index also warns of softening pricing power, with national prices dipping 0.2% in June 2024.

However, these challenges aren't uniform. Saskatchewan and Alberta saw price increases (0.5%), a sign that resource-driven economies and labor shortages in key sectors may insulate certain markets.

Investment Strategy: Play Regional Strengths, Avoid Overbuilt Markets

1. Target Quebec and the Prairies: Focus on REITs and homebuilders active in these regions. Quebec's urban multi-unit demand and Prairie energy-linked job growth make them low-risk bets.
2. Avoid British Columbia: Overbuilt markets and falling rents suggest prolonged weakness.
3. Urban Multi-Unit Exposure: Consider REITs with diversified portfolios in growing cities (e.g., Toronto, Calgary) or ETFs like iShares S&P/TSX Capped REIT Index (XRE).
4. Monitor Building Permits: A will signal whether construction activity is truly stabilizing.

Final Take: Resilience Lies in Regional Selectivity

The Canadian housing market is no monolith. While monthly data swings grab headlines, the real opportunities—and risks—are regional. Investors who align their portfolios with provinces benefiting from job growth, immigration, and undersupplied housing markets will weather short-term volatility. Conversely, those clinging to overbuilt regions like BC may face prolonged underperformance.

In this environment, patience and geographic precision are key. The next phase of Canadian housing resilience will be written in the provinces that balance affordability, job creation, and sustainable demand—not in national averages.

Data as of July 2025. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.