Poor Selling Conditions Weigh on Canadian Builder Sentiment

The Canadian Home Builders Association (CHBA) Housing Market Index (HMI) for Q4 showed that poor selling conditions are leading to a further decline in the sentiment of Canada’s homebuilding industry, the Journal of Commerce reported (2-3-25).

The single-family HMI declined another 2.5 points nationally from the previous quarter to 25.1, just 0.5 points above its record low. The multi-family HMI hit a new record low, falling 6.5 points to 22.0—four points below the previous low set in 2022Q4.

New-home sales remain stronger in regions with lower ownership cost-to-income ratios, reflecting better affordability. Ontario’s multi-family HMI dropped to a record low of 6.2, while British Columbia’s single-family index is also concerning at 10.5, the report notes.

“While the situation is not as dire in the Prairies, where the year finished at a neutral sentiment range, the multi-family HMI there did fall over 10 points from the previous quarter,” a release states. “The single-family HMI for Atlantic Provinces fell for a second consecutive quarter, and while still a neutral reading, their HMI is six points lower than a year ago.”

Nineteen percent of builders cited high construction costs as a top challenge for 2025, with municipal taxes and lengthy approval processes further driving up costs and home prices.

Builders also reported that non-lumber materials have added $36,000 to the cost of a 2,400-square-foot home since late 2023. Meanwhile, softwood lumber prices have risen 10–18% over the past year.

In a statement accompanying the report, CHBA CEO Kevin Lee said:

“Builders across the country are keen to build, but with no buyers, and with increasing costs of construction, including development taxes, they simply cannot build. Sadly, the majority of HMI respondents reported that they had fewer housing starts in 2024 than they did in 2023—a reduction of 50% on average, reflecting the drops we are seeing in builds for homeownership. Interest rates need to keep coming down and be reflected in mortgage rates, and the stress test needs to be more fluid. Importantly, government policy at all levels should focus on decreasing taxes on new homes, reining in runaway development charges, and eliminating costly lags in development approvals.”