Since dropping from the post-pandemic highs in 2021 and early 2022, the Canadian Home Builders’ Association (CHBA) 2025 Q1 Housing Market Index (HMI) is in its eleventh quarter of negative sentiment.
CHBA’s single-family HMI is 26.4 out of 100 for the first quarter of 2025. This score remains close to the index’s record low of 24.6 in Q4 2023 and is down a total of 8.5 points from the score from the same time last year.
The multi-family HMI is 22.3, which remains at its record low score of 22.0 from the fourth quarter of 2024.
Despite industry sentiment being low for eleven quarters, builders have remained optimistic that future sales would be an improvement over their current sales conditions. For the first time since the HMI started, however, the majority of both single- and multi-family builders rated their expectations for future sales as “poor” and worse than their current state.
In Ontario, single-family HMI is at 7.4 and the multi-family HMI at a 2.9, which reflects a grim future for starts in the province in the year ahead and beyond.
British Columbia remains at a level of 17.2 for single-family sales and 24.8 for multi-family sales. Neutral sentiment for single-family homes in the Prairies and moderately positive scores for multi-family in the Prairies and single-family in the Atlantic provinces buoyed the national index slightly, according to the CHBA.
The results of the HMI in recent quarters are also playing out as expected by CMHC’s latest housing starts data. Starts in areas with at least 10,000 population in the first quarter of 2025 fell 9 per cent year-over-year nationally to 45,302 units.
Ontario saw the largest contraction, declining 38 per cent over this time last year, falling 6,722 units, with Toronto falling 65 per cent year-over-year for March.
The decline in British Columbia was 30 per cent or 3,234 units, with Vancouver falling 59 per cent year-over-year for March. Atlantic Canada saw a milder decline of 14 per cent or 417 units and the Prairies had a 24 per cent increase of 2,727 units.
The slow sales and low sentiment stem from affordability challenges, including the rising cost of construction, which builders named as their top challenge going into 2025, high development charges in Canada’s larger urban centres, mortgage rates remaining higher than inflation, and ongoing economic uncertainty due to tariffs. The trade war also threatens residential construction through lower consumer demand, with some increase in construction costs. The average construction material cost to build a 2,400 sq. ft. home has risen by nearly $98,000 since early 2020.
In the first quarter, with the threat of tariffs looming, 71 per cent of builders said they had already received supplier notification of price increases. When asked what percent of the value of their building materials are made in the United States and could be subject to tariffs, the builders’ most common answer was 11 to 20 per cent.
Only 10 per cent believe the value of American-made materials is 31 per cent or more. Appliances and plumbing materials and fixtures are the product categories most exposed to U.S. imports.
“It is critically important that the next government prioritizes housing affordability through smart, long-term policies. With the ongoing Trump tariffs causing economic uncertainty, it is especially important that government policies do what they can to encourage more housing supply to correct the shortage and improve affordability in market-rate housing, especially for homeownership,” said CHBA CEO Kevin Lee.
“Election promises to decrease rampant development charges and reduce the GST on new homes are a good first step but must go further. We also need long-term alternative funding models for how municipalities finance new and aging infrastructure in a way that does not unfairly put the burden on new home buyers, most of whom are younger. So much more can be done, including making mortgages more accessible to well-qualified buyers, improving municipal development processes and timelines, and supporting productivity through de-risking industry investment in factory-based production.”
