Ontario housing starts reach lowest levels since 2009, slowing progress on provincial targets

According to Ontario’s financial accountability office, housing starts have reached the lowest levels across the province since 2009.

The overall economic indicators in the FAO’s report seemed positive – with employment in Ontario rising slightly, and notable increases in manufacturing sales, international exports and imports.

However, housing starts in the first quarter of 2025 dropped by over 20.2 per cent from the previous quarter. Only 12,700 new units broke ground in Ontario during Q1, signalling “significant weakness” in the housing sector.

“Ontario’s housing market is facing significant challenges in the first quarter of 2025 – homes resales dropped by 21.8 per cent, bringing it down to the lowest levels since the mid-2000’s,” said Yefei Zhang, an FAO economist.

In 2022, the Ontario government set a goal to build 1.5 million new homes by 2031. With housing starts declining this much, the province is not on track to meet that target.

“The new construction market in particular has been in free-fall for about three years now,” says Pauline Lierman, VP Market Research with Zonda Urban.

“It’s starting to rear its head now with the extreme double-digit drops in starts, and in the Greater Toronto Area we’ve seen about a 50 per cent decrease in starts. It’s a dark turn […] but I think that we can address it.”

According to Lierman, a pre-construction condo building needs to sell around 70 per cent of its units before construction crews will break ground. One of the largest problems for builders is less demand in today’s market, with many potential homebuyers choosing to wait longer before buying or simply not being able to afford a mortgage.

The less units that get sold on the pre-construction market, the longer it takes to get shovels in the ground.

Despite the FAO reporting some economic growth, tariffs imposed by the U.S. are believed to be hindering the housing market.

“There have been a lot of developments in the tariff policy since the start of 2025 – both positive and negative, so we’ll just need to see how that rolls out,” said Jeffrey Novak, a Financial Accountability Officer.

Rob Flack, Minister of Municipal Affairs and Housing, claims the province still intends to make good on its promise to deliver 1.5 million new units by 2031, but progress has been slowed by external forces outside of the provincial government’s control.

“While we’ve made progress, we face challenges beyond our control – global uncertainties, supply chain disruptions, and with President Trump’s tariffs and tariff threats, it is not business as usual,” said a spokesperson from the Minister of Municipal Affairs and Housing.

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