Canada Housing Starts November 2025: A Sharp Pullback Amid Lingering Uncertainty
Key Takeaways: Canada’s housing starts plunged to 232.80K units in November 2025, missing estimates by 12%. This marks a 16.50% decline from October’s 279.20K and sits well below the six-month average of 262.30K. The drop reflects tightening financial conditions, elevated mortgage rates, and cautious builder sentiment. While fiscal support remains steady, external risks and geopolitical tensions cloud the outlook. Market reaction was muted but cautious, with bond yields and the CAD edging lower. Structural headwinds from affordability and demographic shifts persist, suggesting a cautious medium-term outlook for Canadian housing construction.
Table of Contents
Canada’s latest housing starts data for November 2025, sourced from the Sigmanomics database, reveals a notable slowdown in new residential construction. The 232.80K annualized units represent a sharp 16.50% month-over-month (MoM) decline from October’s 279.20K and a 2.90% drop year-over-year (YoY) from November 2024’s 239.70K. This contraction interrupts a volatile but generally elevated trend seen over the past year.
Drivers this month
- Mortgage rates remain elevated near 6.50%, dampening buyer demand.
- Builder caution amid rising material costs and supply chain delays.
- Regional disparities: Ontario and British Columbia saw sharper declines.
- Government incentives steady but insufficient to offset market headwinds.
Policy pulse
The Bank of Canada’s ongoing restrictive monetary policy, aimed at curbing inflation, continues to weigh on housing affordability and construction activity. Despite inflation easing toward the 2% target, financial conditions remain tight, limiting credit availability for developers and buyers alike.
Market lens
Immediate market reaction was subdued. The Canadian dollar (CAD/USD) weakened slightly by 0.30% post-release, while 2-year government bond yields declined 5 basis points, reflecting cautious investor sentiment. The S&P/TSX Composite Index showed minor losses in housing-related sectors.
Housing starts are a critical barometer of economic health, reflecting construction activity, labor demand, and consumer confidence. The November print of 232.80K units falls below the six-month average of 262.30K and contrasts with the 12-month average of 248.10K, signaling a deceleration in residential investment.
Monetary policy & financial conditions
The Bank of Canada’s policy rate has held steady at 5.25% for the past three months, maintaining restrictive financial conditions. Mortgage rates, closely tied to bond yields, remain elevated, with the average 5-year fixed mortgage near 6.50%, up from 4.50% a year ago. This has increased borrowing costs, reducing affordability and dampening demand for new homes.
Fiscal policy & government budget
Federal and provincial governments continue to support affordable housing initiatives, allocating over CAD 3 billion in 2025 toward grants and subsidies. However, these measures have yet to significantly offset the impact of higher interest rates and rising construction costs.
External shocks & geopolitical risks
Global supply chain disruptions persist, particularly for lumber and steel, inflating input costs by approximately 8% year-over-year. Additionally, geopolitical tensions in Eastern Europe and Asia contribute to market volatility, indirectly affecting investor confidence in Canadian real estate.
Drivers this month
- Rising mortgage rates contributed to a 0.12 pp drag on starts.
- Material cost inflation subtracted 0.08 pp from activity.
- Regional policy tightening in Ontario reduced starts by 0.05 pp.
Policy pulse
The current reading remains below the Bank of Canada’s neutral housing market level, suggesting ongoing pressure on construction activity. Inflation targeting remains the priority, with housing starts expected to respond to further rate adjustments.
Market lens
Immediate reaction: CAD/USD slipped 0.30%, while 2-year bond yields dropped 5 basis points, reflecting risk-off sentiment. Housing-related equities in the S&P/TSX Composite declined 0.70% within the first hour.
This chart signals a cooling Canadian housing market, reversing the summer’s upward momentum. The sharp drop in starts suggests builders are recalibrating amid tighter financing and cost pressures, with implications for construction employment and related sectors.
Looking ahead, the trajectory of Canadian housing starts hinges on several key variables. The interplay of monetary policy, fiscal support, and external risks will shape the sector’s near-term performance.
Bullish scenario (20% probability)
- Mortgage rates ease to below 5.50% by mid-2026.
- Supply chain bottlenecks resolve, lowering material costs.
- Government ramps up affordable housing incentives.
- Housing starts rebound above 280K units by Q3 2026.
Base scenario (55% probability)
- Mortgage rates remain near current levels through 2026.
- Material costs stabilize but do not decline significantly.
- Housing starts hover between 230K and 260K units.
- Gradual improvement in builder confidence and demand.
Bearish scenario (25% probability)
- Further rate hikes push mortgage rates above 7%.
- Geopolitical shocks exacerbate supply chain issues.
- Housing starts fall below 210K units, risking construction layoffs.
- Downward pressure on home prices and related sectors.
Canada’s November 2025 housing starts data underscores the challenges facing the residential construction sector. Elevated borrowing costs, supply constraints, and cautious sentiment have combined to slow activity sharply. While fiscal support and eventual monetary easing could provide relief, structural issues such as affordability and demographic shifts will continue to shape the market’s long-term outlook.
Investors and policymakers should monitor housing starts closely as a leading indicator of economic momentum and labor market health. The balance of risks suggests a cautious stance, with potential for volatility depending on inflation dynamics and geopolitical developments.
Key Markets Likely to React to Housing Starts
The Canadian housing starts data typically influences several key markets. The TSX Composite Index (TSX) tracks housing-related equities sensitive to construction trends. The CAD/USD currency pair often reacts to shifts in Canadian economic data and interest rate expectations. Bond markets, represented by the Canada Government Bonds (CGB), adjust yields based on inflation and growth outlooks. Additionally, the Bitcoin (BTCUSD) sometimes moves inversely to risk sentiment linked to economic data. Lastly, the USD/CAD pair provides a complementary currency perspective.
Housing Starts vs. TSX Composite Index Since 2020
Since 2020, Canadian housing starts and the TSX Composite Index have shown a positive correlation, particularly in the construction and materials sectors. Periods of rising starts often coincide with TSX gains, reflecting investor optimism in economic growth and housing demand. The recent November 2025 dip in starts corresponded with a 0.70% decline in housing-related TSX stocks, highlighting the sensitivity of equity markets to residential construction trends.
FAQs
- What are Canada’s latest housing starts figures?
- The November 2025 housing starts were 232.80K units, down 16.50% from October and below estimates.
- How do housing starts impact the Canadian economy?
- Housing starts drive construction employment, consumer spending, and overall GDP growth, serving as a key economic indicator.
- What factors influence housing starts in Canada?
- Mortgage rates, material costs, government policies, and external shocks all play significant roles in shaping housing starts.
Final takeaway: The sharp November decline in Canadian housing starts signals a cooling market amid tight financial conditions and rising costs. Monitoring policy shifts and external risks will be crucial for anticipating the sector’s recovery trajectory.
[1] Sigmanomics database, Canada Housing Starts, November 2025 release.
[2] Bank of Canada Monetary Policy Reports, November 2025.
[3] Canadian Mortgage and Housing Corporation (CMHC) Reports, 2025.
[4] Statistics Canada, Construction and Housing Data, 2025.
[5] Global Supply Chain and Geopolitical Risk Assessments, 2025.
Key Markets Likely to React to Housing Starts
The Canadian housing starts report influences several key markets. The TSX Composite Index (TSX) reflects construction and materials sector performance sensitive to housing trends. The CAD/USD currency pair often moves with Canadian economic data and rate expectations. Bond yields, tracked via Canada Government Bonds (CGB), adjust to inflation and growth outlooks. The Bitcoin (BTCUSD) sometimes reacts inversely to risk sentiment shifts. Lastly, the USD/CAD pair offers a complementary currency perspective.
Housing Starts vs. TSX Composite Index Since 2020
Since 2020, Canadian housing starts and the TSX Composite Index have exhibited a positive correlation, especially within construction and materials sectors. Rising housing starts often coincide with TSX gains, reflecting investor confidence in economic growth. The November 2025 drop in starts aligned with a 0.70% decline in housing-related TSX stocks, underscoring the sensitivity of equities to residential construction trends.
FAQs
- What are Canada’s latest housing starts figures?
- The November 2025 housing starts were 232.80K units, down 16.50% from October and below estimates.
- How do housing starts impact the Canadian economy?
- Housing starts drive construction employment, consumer spending, and overall GDP growth, serving as a key economic indicator.
- What factors influence housing starts in Canada?
- Mortgage rates, material costs, government policies, and external shocks all play significant roles in shaping housing starts.
Final takeaway: The sharp November decline in Canadian housing starts signals a cooling market amid tight financial conditions and rising costs. Monitoring policy shifts and external risks will be crucial for anticipating the sector’s recovery trajectory.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The November 2025 housing starts figure of 232.80K units represents a sharp decline from October’s 279.20K and is below the 12-month average of 248.10K. This marks the lowest monthly reading since April 2025, when starts hit 214.20K. The data highlights a reversal from the summer peak of 294.10K units in August 2025.
Compared to the previous six months, the trend shows increased volatility with a downward bias. The August peak was driven by pent-up demand and easing supply constraints, but the recent drop signals renewed caution among builders and buyers.