CMHC Spring 2026: Small Buildings Outnumber Towers for the First Time on Record — What Presale Buyers Need to Know

It's a data point that almost nobody in the Vancouver real estate industry is talking about: for the first time in recorded history, buildings with three to five units are now more prevalent in new Canadian housing starts than projects with more than 100 units. That's according to CMHC's Spring 2026 Housing Supply Report, released this month.

If you're a presale condo buyer in Metro Vancouver, this shift matters more than you might realize.

Quick Answer

The condo tower pipeline is quietly collapsing. CMHC data shows small-scale builds (3–5 units) have overtaken large multi-residential towers (100+ units) in new construction starts for the first time on record. This structural change means fewer purpose-built presale condos will be entering the ownership market over the next 24–36 months — tightening future supply for buyers who wait. Presale buyers who move now are locking in ahead of a significant inventory squeeze.

Key Facts

• For the first time on record, buildings with 3–5 units are more prevalent in new construction starts than projects with more than 100 units — CMHC Spring 2026 Housing Supply Report

• CMHC projects housing starts will decline from 2026 to 2028, reversing a period of aggressive development

• The decline is driven by low condo presales, slower population growth, and US-Canada trade war uncertainty

• Vancouver currently has the highest level of unsold condo inventory at completion among major Canadian cities — a temporary negotiating window for buyers

• The BoC held its overnight rate at 2.25% (third consecutive pause) on March 18, 2026 — keeping the prime rate at 4.45%

• Construction timelines span 24–36 months — a slowdown in starts today becomes a supply crunch in 2027–2029

What the CMHC Report Actually Says

CMHC's Spring 2026 Housing Supply Report is a dense document, but it contains one data point that cuts through the noise: the composition of Canada's new housing starts has inverted.

For most of the last decade, large high-rise towers with 100 or more units dominated construction activity in major metros like Vancouver, Toronto, and Montreal. These towers are the backbone of the presale condo market — they're the projects that sell in phases, require presale thresholds to unlock construction financing, and complete 30–36 months after launch.

Now, small buildings — the three-plex, four-plex, and five-plex missing middle stock — are being built at higher volumes than those towers. This isn't because small builders are suddenly thriving. It's because tower developers are pumping the brakes.

The reason comes down to a few compounding pressures:

Construction costs remain elevated. Tariffs on US steel and lumber, skilled trade shortages, and supply chain disruptions have pushed construction budgets well above 2022 levels. For a tower to pencil out financially, developers need to hit presale prices that are often above what today's buyers are willing to pay.

Presale demand has softened. Investor sentiment in the condo market has cooled significantly. Buyers who purchased in 2020–2022 are coming to completion now — and many are facing mortgage qualification challenges, lower-than-expected appraisals, and cashflow issues on rental suites. That's chilling appetite for the next wave of presales.

Financing thresholds are harder to meet. Most lenders require presale contracts on 60–70% of a tower's units before they'll advance construction financing. In a slow market, that threshold takes longer to hit — or never gets hit at all, causing projects to be shelved.

The result: the tower pipeline is shrinking, and it won't bounce back overnight.

The Supply Paradox Presale Buyers Are Missing

Here's the counterintuitive reality: the Vancouver market is simultaneously showing high inventory and tightening supply. These two things are not contradictory — they just refer to different parts of the timeline.

Right now: There's more supply visible to buyers than at any point since the pandemic. Unsold completions are sitting on developer balance sheets. The REW February 2026 data shows total newer-home resale inventory tightened 9% year-over-year, but aggressive developer incentives on completions are competing directly with resale listings. For a buyer in 2026, this creates real negotiating leverage — something that hasn't existed for most of the last decade.

In 2027–2029: The pipeline dries up. If tower presales aren't happening at scale today, there are no completions coming in 24–36 months. CMHC is explicitly flagging that housing starts are expected to hit "historically weak levels" over the next two years. That means less ownership-product inventory, more competition for what's available, and likely price support or appreciation.

This is the window buyers keep waiting for — and then missing.

What This Means for the Missing Middle vs. Condo Presale Decision

The CMHC data is being cited by some commentators as evidence that the housing market is "adapting" — moving toward smaller, more affordable missing middle stock. That's partially true. Multiplexes and townhomes are easier to finance at today's cost structures and don't require the same presale thresholds as towers.

But for a buyer comparing a presale condo to a new townhouse or small multiplex, this distinction matters:

• Presale condos in towers offer defined delivery timelines, developer incentives, and price-locking in a market where construction costs are likely to keep rising. They're in the segment of the market where supply is contracting fastest.

• Missing middle stock (3–5 unit buildings) is being built in larger numbers, but these units typically don't come to market as presales — they're often sold on completion or as investor-owned rentals. The presale pipeline for ownership-product condos is shrinking regardless.

If you're buying presale for owner-occupation or investment appreciation, the tower segment is where the supply squeeze will be most acute.

For more on how the supply pipeline affects completion risk, see our analysis of Vancouver's presale shadow inventory and completion risk and CMHC's condo pipeline contraction and what it means for buyers.

The BoC Hold and What It Changes (and Doesn't)

On March 18, 2026, the Bank of Canada held its overnight rate at 2.25% — the third consecutive pause. Prime rate stays at 4.45%. Variable mortgage rates remain around 3.35% at the most competitive lenders.

What this means for presale buyers:

Rate relief isn't coming fast. Bond markets are now assigning only a slight probability of further cuts in 2026. Economic uncertainty from the US-Canada trade war is making the BoC cautious about both cutting (inflation risk from tariffs) and hiking (growth risk from trade disruption). Rates are essentially parked.

For presale buyers, this actually reinforces the supply-driven thesis. Rate cuts aren't going to be the catalyst that drives the next round of appreciation. Supply contraction will be. And the CMHC data shows that supply contraction is already in motion.

How to Think About This as a Buyer

If you're sitting on the sidelines waiting for a definitive buying signal, the CMHC Spring 2026 data is one. Not because prices are about to moon, but because the conditions that have historically preceded a supply-driven recovery are forming right now:

1. Developer pipeline is contracting (fewer starts → fewer completions in 2027–2029) 2. Presale inventory is available with incentives that rarely appear in this market 3. Mortgage rates are stable — not great, but predictable 4. The competition pool is thin — most buyers have stepped back

The question isn't whether conditions will be better eventually. They often do get better — for sellers. For buyers, the window that exists right now — incentives, negotiating power, thinner competition — is a function of current market softness. Once the supply squeeze of 2027–2029 arrives, that window closes.

For buyers exploring Vancouver's presale market right now, see our complete guide to BC home sales dropping across every region and what construction data tells us about future pricing and our 2026 framework for presale vs. resale decision-making in Metro Vancouver.

FAQ

What is the CMHC Spring 2026 Housing Supply Report? It's CMHC's semi-annual analysis of national housing construction trends, presale pipeline data, and supply-demand projections by market. The Spring 2026 edition was released in mid-March 2026 and contains data through early 2026, including the historic milestone showing small buildings (3–5 units) now outnumber large towers (100+ units) in new construction starts.

Why does it matter if small buildings outnumber towers now? Because towers — not small buildings — are the primary source of presale condo supply in major cities like Vancouver. If towers aren't being built, presale condo inventory tightens. Small buildings rarely come to market as presales; they're built and sold on completion or rented. The shift in starts composition signals a long-term contraction in presale ownership product.

Is Vancouver's condo market in a glut right now? Partially. Vancouver has an elevated level of unsold completed condo units on developer balance sheets — the highest among major Canadian cities per CMHC. That's a short-term surplus, not a structural glut. The pipeline for new condo production is shrinking, which means the glut is temporary. The supply crunch comes later.

Should presale buyers wait for rate cuts? Rate cuts don't appear imminent. The BoC held at 2.25% for the third time in a row on March 18, 2026, and forecasters now expect rates to remain flat for the rest of 2026. Waiting for further rate relief means waiting inside a window of developer incentives and thin competition that is closing as the pipeline contracts.

What projects are available for presale buyers in Metro Vancouver right now? There are a limited number of active presale projects across the Metro. Contact Matt directly to access Origin Group's inventory and current developer incentive packages — some of which aren't publicly marketed.

How do I know if a specific presale project will actually complete? Key signals: the developer's track record, how close they are to meeting their presale financing threshold, whether construction has started, and the strength of the disclosure statement. See our breakdown of presale deposit protection and completion risk in BC for 2026 for a detailed framework.

Matt Brevner is a licensed PREC in British Columbia and a former journalist. He works exclusively with presale buyers in Metro Vancouver and holds exclusive pricing access through Origin Group. Reach him directly to discuss current projects.