Housing, infrastructure, and the construction supply chain. The domestic investment story, and the gap between what Canada has committed to build and its current capacity to build it.
Canada's housing and infrastructure deficit is structural, not cyclical. The Carney government has committed to doubling residential construction to 500,000 homes per year over the next decade.1 Canada currently builds approximately 259,000 units per year, and the Spring 2026 CMHC Housing Supply Report projects starts will decline through 2026 to 2028 as condominium presales collapse and developers face elevated costs.2 The gap between the stated target and the current trajectory is not a rounding error. It is the central domestic economic challenge of this decade.
The productivity problem is where the research is most candid. The Centre for the Study of Living Standards estimates that residential construction productivity losses between 2019 and 2024 added between $6 and $8 billion to housing construction costs in Canada, accounting for up to 20% of the increase in new home prices over that period.3 In 2024, residential construction accounted for 4.2% of business-sector employment but only 3.3% of business-sector value added. The industry is expanding its workforce while producing less output per worker. This is the definition of a productivity crisis.
The construction industry itself understands this. A C.D. Howe Institute analysis published in July 2025 documents how restrictive regulatory frameworks, development charges, and land use constraints compound the supply problem, and finds that technology adoption, while promising, has not consistently delivered cost savings in the Canadian context because country-specific evidence is lacking and policy environments remain uncertain.4 Modular construction, mass timber, panelization, and 3D concrete printing all exist and are being deployed, but at pilot scale, not the mass production scale that 500,000 homes per year requires.
The School of Cities at the University of Toronto and Toronto Metropolitan University's City Building research group have modelled what types of housing Canada actually needs to meet supply targets while addressing affordability and climate goals simultaneously.5 Their finding is that the mix matters as much as the volume: an industrial strategy for homebuilding that prioritizes missing middle housing, multiplexes, row houses, low-rise apartments, near transit corridors delivers both supply and climate outcomes more effectively than high-rise condominium production in central cores.
The trade dimensions are direct and underreported. Softwood lumber, structural steel, concrete, copper wiring, electrical equipment, and HVAC systems are all trade-affected commodities. The 14.54% US countervailing duty on Canadian softwood lumber raises residential construction costs across North America, Canada is simultaneously the world's largest softwood lumber exporter and a country where the same lumber is more expensive to build with because of US trade disputes. The Section 232 steel tariff affects structural steel pricing for every commercial and institutional building permit in the country. Every budget for a new transit line, hospital, or school is written with these tariff costs embedded.
Building at scale requires a supply chain that Canada currently does not have at the scale required. Construction is not just a domestic policy story, it is a trade story, an import story, and a procurement story that connects directly to the signals CTI tracks every week.
Softwood lumber is the most politically charged of these supply chain inputs. Canada exports the majority of its softwood lumber production to the US market, yet the 14.54% countervailing duty means that Canadian construction projects pay elevated prices for the same material that Canadian forests produce. The US-Canada softwood lumber dispute has been ongoing for decades and the 2026 CUSMA joint review is the next formal window. The dispute's resolution, or escalation, directly prices into every residential construction project in both countries.
Structural steel, through the US Section 232 tariff framework, is the second major material input with direct trade exposure. The tariff affects both Canadian steel exporters selling into the US market and Canadian builders using structural steel in commercial and institutional projects. Every major infrastructure project, transit, hospital, industrial, carries Section 232 costs embedded in its steel inputs.
Less visible but equally significant is the electrical supply chain. Copper wiring, electrical panels, transformers, and HVAC systems are increasingly constrained by global supply chains affected by the same critical minerals dynamics that CTI tracks in the Critical Minerals sector. The electrification of buildings, required for Canada's 2050 net-zero commitments, increases the electrical component intensity of every new build precisely when global copper and rare earth supply chains face the most pressure.
The housing crisis is not evenly distributed. Indigenous communities face a housing deficit that is structurally distinct from the urban affordability crisis, requiring different policy instruments and, critically, Indigenous-led solutions. The CMHC Housing Supply Challenge Northern Access round committed $74.6 million to 15 finalist projects including an Indigenous-led "Standing Tree to Standing Home" approach that integrates mass timber construction with First Nations economic development. Federal investment of $918 million over five years was announced for Indigenous Services Canada and Crown-Indigenous Relations to help narrow the First Nations, Inuit, and Metis housing and infrastructure gap. The "for Indigenous, by Indigenous" National Housing Centre, established through the Urban, Rural and Northern Indigenous Housing Strategy, represents a governance model that treats Indigenous housing as a self-determination question rather than a service delivery question.8
Innovation in construction methods, modular, mass timber, prefabricated panels, represents both a supply chain opportunity and a supply chain risk. Mass timber, where BC and Quebec are global leaders, creates a domestic supply chain with export potential. Modular construction, where New Brunswick and Nova Scotia are seeing growth, uses a factory-based supply chain that is less exposed to on-site labour shortages.7 But both methods require confidence in future demand to justify factory investment, a classic chicken-and-egg problem that government procurement commitments and pre-sale guarantee programmes are designed to break.
The most important number in Canadian housing policy right now is not 500,000. It is 56%. Federal housing programme spending is projected to decline 56% between 2025–26 and 2028–29, from $9.8 billion to $4.3 billion, as existing programme funding expires and new programmes remain at pilot scale.
This projection comes from the Parliamentary Budget Officer's analysis of the November 2025 federal budget. The Carney government's Build Canada Homes initiative, its flagship housing programme, is currently scoped to support approximately 4,000 new homes, a pilot, not a system.6 The National Housing Strategy's $115 billion over ten years is largely committed to existing programmes, repair funding, and Indigenous housing, not the new supply that the 500,000 per year target requires.
The Canada Infrastructure Bank has deployed $11 billion across 57 projects as of 2025, with a mandate covering clean power, green infrastructure, transit, and broadband. Its housing-related investments are growing but represent a small fraction of the capital required for the government's stated ambitions. The Apartment Construction Loan Program was expanded by $15 billion in new loan funding starting 2025–26, bringing its total to $55 billion, this is the most significant new funding instrument, but it is debt, not grant, and its uptake depends on developers having viable projects to finance at current construction costs and interest rates.
The honest picture is this: the fiscal commitment does not yet match the stated ambition. That gap is either a future budget story, additional funding will be announced as the 2026 review cycle proceeds, or it is evidence that the 500,000 target is aspirational rather than funded policy. Both possibilities matter for the construction supply chain, for procurement planning, and for the businesses that supply it. Watching what happens to the housing programme envelope in the 2026–27 budget is the single most important signal for the Build Canada theme.
These profiles rotate as new research is published. They represent the researchers whose current work most directly informs the Build Canada analysis above.