Canada's homebuilding industry feeling strain of U.S. tariffs on costs, supply chain

National Post

5 days ago

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'They're taking advantage of the availability of acquiring it and then having it available for the future, which then increases the overhead because you're holding on to that material, rather than acquiring it when you need it,' Shindruk said.
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With early concerns about the effects of the trade war, Greater Toronto Area-based Altree Developments had forecast a three to five per cent hit to its overall budget, said the company's president and CEO, Zev Mandelbaum.
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That figure has since decreased due to more Canadian material being available than first anticipated, said Mandelbaum. But he said the roller-coaster of tariff developments — from the latest threat of additional levies to hope that ongoing negotiations will soon lead to a new trade deal — has made it 'impossible' to plan ahead.
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He added his company has seen a far greater impact on the revenue side of the business over the past six months, as economic uncertainty drove down buyer demand.
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'It was more the fear of just … economic instability in Canada that stopped house buying and stopped people from wanting to invest, whether it be locals looking for homes or foreigners looking to invest in the country,' he said.
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'That alienation caused us to have less sales, and because of that, that put even more pressure on construction costs.'
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In its housing forecast for the year, published in February, Canada Mortgage and Housing Corp. predicted a trade war between Canada and the U.S. — combined with other factors such as reduced immigration targets — would likely slow the economy and limit housing activity.
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The national housing agency had also said Canada was set for a slowdown in housing starts over the next three years — despite remaining above the 10-year average — due to fewer condominiums being built, as investor interest lags and demand from young families wanes.
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As of June, year-to-date housing starts totalled 114,411 across regions with a population of 10,000 or greater, up four per cent from the first half of 2024.
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Despite that boost in new construction, a regional analysis shows provinces with industries more exposed to tariffs are experiencing a slowdown, said CMHC chief economist Mathieu Laberge. He noted Ontario's housing starts have dropped around 26 per cent to date year-over-year, while B.C. has seen an eight per cent decline.
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In Ontario, five of the 10 most tariff-impacted cities also recorded an increase in mortgage arrears during the spring. Laberge said the trade war, or associated macroeconomic factors, likely prompted layoffs in those regions, which meant people couldn't pay their mortgage.
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He said he expects that will eventually translate to a lower number of homes being built.
'This is a slow filter through, but it's a real one. We see it happening — although maybe not in the housing starts or resales yet,' Laberge said.
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Lee said the industry is already noticing those effects.
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'The big problem now is we're just not getting the kind of starts we need and there's a lot of concern in the industry now,' Lee said.
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Before tariffs, he said some regions, such as Atlantic Canada and the Prairies, had started to see housing starts rebound from a national lull that was fuelled by previously high interest rates. Other provinces, such as Ontario and B.C. — where houses remain the most expensive — hadn't yet reached similar levels of new construction.