Toronto Condo Construction Hits a Decades-Long Low as Rental Development Surges

Toronto’s housing market is sending two very different signals.

Condo construction has slowed to levels not seen in decades, while purpose-built rental construction is surging. For the first time since 1994, rental apartment starts have surpassed condominium apartment starts in Toronto.

It’s a dramatic shift in what is actually getting built — and it raises an important question about the future of housing affordability and homeownership in the city.

Toronto Condo Construction Has Slowed Dramatically

According to the Canada Mortgage and Housing Corporation (CMHC), just 156 condominium units started construction in the City of Toronto during the first half of 2026.

For perspective, Toronto averaged approximately 7,000 condo starts per year over the previous decade.

The slowdown extends beyond condos. Population-adjusted housing starts in the first half of 2026 were at their lowest level since 1996, excluding 2025, while the number of permitted units waiting to begin construction has fallen approximately 50% from its 2023 peak.

Condo project launches have largely stalled, and construction of ground-oriented ownership housing remains exceptionally weak.

Meanwhile, Rental Construction Is Booming

While ownership-oriented construction has struggled, purpose-built rentals are moving in the opposite direction.

Rental apartment starts increased 82% in the first half of 2026 compared with the same period in 2025.

That increase pushed rental apartment starts above condo apartment starts for the first time since 1994.

There are several factors behind the shift. Government financing programs and municipal incentives have helped make purpose-built rental projects more viable, while some developments originally planned as condominiums have been converted to rentals.

At the same time, the economics of new condo development have become much more challenging.

Why Aren’t Developers Building Condos?

Toronto’s pre-construction condo market has historically depended heavily on presales.

Developers typically need to sell a significant portion of a project before lenders will provide construction financing. But higher borrowing costs, weaker investor demand and increased resale condo inventory have made those presales much harder to achieve.

When buyers and investors aren’t purchasing enough units before construction, projects can be delayed, converted to rentals or cancelled altogether.

That creates an unusual situation: Toronto currently has significant condo inventory available to buyers, yet the pipeline of new condos that would normally replace that inventory several years from now has weakened considerably.

What Does This Mean for Toronto Housing Affordability?

The current slowdown has helped improve affordability somewhat as home prices have softened and rent growth has slowed.

But CMHC warns that these improvements largely reflect softer market conditions rather than a permanent solution to Toronto’s housing shortage.

The agency estimates that Toronto needs to increase annual housing starts by at least 50% over the next decade to return housing affordability to 2019 levels.

That represents approximately 21,000 to 26,000 additional housing starts every year.

So while Toronto may have more inventory and negotiating room today, the longer-term supply picture remains a concern.

More Rentals Help — But They Don’t Replace Ownership Housing

The surge in purpose-built rental construction is an important addition to Toronto’s housing supply.

More rental inventory can provide renters with additional choice and help ease pressure on rents. In fact, Toronto renters have already been benefiting from increased selection, with average GTA condo rents remaining below year-ago levels in the second quarter of 2026.

But rental apartments and ownership condos serve different parts of the housing market.

A city can add thousands of rental units while still failing to create enough new homes for people who eventually want to transition from renting to owning.

There is another wrinkle: investor-owned condos have historically contributed a significant amount of Toronto’s rental inventory. If fewer condos are completed in the coming years, that source of secondary rental housing could also shrink.

What Buyers and Sellers Should Watch

For buyers, today’s slower condo market can create opportunities that were difficult to find during Toronto’s previous periods of intense competition. More listings, softer pricing and less investor activity can give buyers additional leverage.

However, real estate decisions should also consider the longer-term construction pipeline.

Buildings that are not being launched or started today will not suddenly appear when demand increases several years from now.

For sellers, this is why it is important to separate current market conditions from Toronto’s longer-term housing fundamentals. Pricing correctly for today’s market remains critical, but current inventory levels don’t necessarily tell us what supply will look like three, four or five years from now.

The Bottom Line

Toronto’s housing numbers highlight a major shift.

Condo construction has fallen dramatically while purpose-built rental development is experiencing a resurgence. Rentals surpassed condo starts for the first time since 1994, yet Toronto still needs substantially more overall housing construction to make affordability improvements sustainable.

The biggest question may not simply be whether Toronto is building enough homes.

It’s whether the city is building the right mix of housing for renters, first-time buyers, move-up buyers and future homeowners.

If you’re considering buying, selling or investing in Toronto real estate, understanding what is happening with both today’s inventory and tomorrow’s housing supply can help you make a more informed decision.

The strongest primary source is CMHC’s Fall 2026 Housing Supply Report. For additional market context, the Bank of Canada’s analysis of Toronto’s condo slowdown explains the presale/investor side, while TRREB’s Q2 2026 Rental Market Report provides current GTA rental data.