Rental-Led Housing Starts Mask Canada's Condo Slump, BMO Says

07:40 AM EDT, 09/17/2026 (MT Newswires) -- Canadian housing starts are holding up relatively well, reaching an annualized pace of 229,000 units in August, although rental construction is driving much of the strength, according to BMO Capital Markets in a note. Beneath the headline figure, the condo market is showing clear signs of weakness, said BMO in Wednesday's note. Condo starts have dropped to their lowest level since the 2009-10 financial crisis and recession, while the number of units under construction has been steadily declining. The weakness is compounded by continued declines in resale prices, added the bank. "This is by all accounts a legitimate recession in this corner of the market," wrote BMO Senior Economist Robert Kavcic in the note. One of the key obstacles -- and a factor that could prolong the downturn -- is the wide gap between resale prices per square foot and the cost of developing new units, with resale values still several hundred Canadian dollars lower. The market likely needs time to work through the excess supply accumulated during the pandemic and gradually regain balance, said BMO. While housing markets tend to adjust over time, the condo sector may face a longer adjustment period as supply works down and market conditions stabilize.