Ontario Re-Calibrates Housing Targets as 2026 Budget Signals Construction Slump

Four years after the Progressive Conservatives swept to re-election on a bold promise to build 1.5 million homes over a decade, the reality of a stalled construction sector is forcing the Ford government to pivot.

The province’s 2026 budget, released this week, paints a sobering picture for Ontario’s housing landscape. Despite aggressive policy shifts and the controversial inclusion of long-term care beds in housing “starts,” the government’s signature goal now appears increasingly out of reach.

The numbers tell a story of consistent downward revisions. In November 2025, the fall economic statement projected 315,000 new housing starts between 2025 and 2028. Just months later, that figure has been slashed by over 10%, with the treasury now expecting only 276,900 units in that same window.

“Construction activity softened and is expected to remain subdued in 2026,” the budget blueprint admitted, citing “uncertainty” in the private sector as the primary headwind.

The gap between ambition and reality is widening: Original 2026 Projection: 74,800 starts, Revised 2026 Projection: 64,800 starts, Target Needed for 1.5M Goal: Approximately 175,000 starts per year through 2031

With the province expected to manage fewer than 77,000 starts annually through 2028, experts suggest the 1.5-million-home milestone has moved from “ambitious” to “impossible.”

The language coming from Queen’s Park has shifted from ironclad guarantees to a focus on immediate affordability. Finance Minister Peter Bethlenfalvy, who previously labelled the 1.5 million figure a “soft” target, doubled down on that stance during the budget rollout.

“No, no, I’m not focused on the target,” Bethlenfalvy said when pressed on the feasibility of the 2031 goal. “I’m focused on what we can do today to make it more affordable for people to own homes.”

While the new construction sector remains in a “slump,” the government is finding a silver lining in the resale market. After a 5.6% drop in resales last year, the budget forecasts a 9.1% rebound in 2026, fuelled by pent-up demand and cooling mortgage rates.

To bridge the gap between a recovering resale market and a struggling construction sector, Premier Doug Ford has unveiled a massive financial incentive. In a move aimed at jumpstarting sales for developers, the province is expanding its HST waiver.

Originally intended for first-time buyers, the sales tax on new builds will now be waived for anyone purchasing a new home in Ontario for the next year. This joint effort with the federal government is expected to cost the provincial treasury $1.4 billion.

“Let’s start selling these homes, let’s start building them,” Premier Ford urged during a press conference in Mississauga. “And people of Ontario, please go out and purchase a new home.”

Whether a tax break is enough to overcome high labour costs and developer caution remains to be seen. Housing Minister Rob Flack has stated he expects to see the “real world” impact of these policy changes by this spring.

For now, the 2026 budget serves as a formal acknowledgment that the “Build Ontario” era is entering a more pragmatic and perhaps more difficult phase. For thousands of Ontarians waiting for relief, the wait for a massive surge in supply continues.