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The report said it expects an average of 227,000 new homes should be completed a year for the next decade. This means the PBO expects about 2.5 million homes to be built over the next 10 years.

But it said Canada needs 3.2 million homes, leaving a gap of almost 700,000 homes between what is currently projected to be built, and what is needed.

Demand for new homes will get some reprieve from Canada slashing its immigration targets, but record numbers of new households forming in recent years will keep demand high for several more years.

In 2024 there was a record high of 482,000 new households formed in Canada. The PBO expects the average number of new households to be 159,000 a year between 2025 and 2035.

The increased construction and decreased demand will eventually combine to correct the historically low vacancy rate that contributed to soaring home prices in recent years, the PBO said.

The vacancy rate hit 3.3 per cent in 2024, well below the historic average of 6.4 per cent between 2000 and 2019.

PBO says if Canada is to close the housing gap entirely it will need to add about 290,000 homes every year for the next 10 years, which is more than Canada has ever built in a year. 

In 2024, Canada completed 276,000 new homes, which was the highest number to that point.

The PBO's analysis differs from estimates made by the Canada Mortgage and Housing Corporation in June. The Crown corporation said in its latest housing stock report that Canada needs between 430,000 and 480,000 new homes a year to restore affordability.

The PBO report said that this would result in a vacancy rate of 13 per cent by 2035, resulting in "abnormally high levels" of unoccupied homes. 

Aled ad Iorweth, the CMHC's deputy chief economist, said that their report uses "a lot more complexity" in its methodology, including regional differences and population movement.

"I think it's important because of the housing challenges differ so much across Canada. I would also say that based on our recent work, it's important to understand how those patterns are changing," ad Iorweth said in an interview with °µÍø½ûÇø. 

"We're already seeing that population growth in Calgary and Edmonton is greater than in Toronto and Vancouver, and I would argue housing affordability has got something to do with that."

Ad Iorweth said the CMHC is also looking at homeowners looking to upgrade their property, such as a condominium owner moving to a detached house, when they developed their projections. 

The CMHC report characterizes affordability as the cost of housing before the COVID-19 pandemic, a contributing factor to why that agency's projection on how many homes should be built is higher. 

This report by °µÍø½ûÇø was first published Aug. 26, 2025.