Canada’s building construction sector experienced a notable downturn in May, with overall investment dropping to $21.8 billion, representing a 2.2 percent decline from April. The monthly amount is nearly half a billion dollars due to the slowdown in residential construction, while the non-residential sector posted only a minor decrease.
Residential investment fell by 3.0 per cent to $15 billion in May. Single-family homes and multi-unit projects lost momentum amid high borrowing costs and persistent affordability challenges. Multi-unit construction led the decline with a 3.4 per cent drop to $8.5 billion. Ontario and Quebec were responsible for much of the contraction, posting respective losses of $166.4 million and $159 million. By contrast, Alberta saw a significant uptick of $50.4 million, marking a bright spot for Western Canada alongside Saskatchewan, which gained $20.2 million.
Single-family home construction also struggled, falling 2.5 per cent to $6.6 billion. Ontario again accounted for nearly half of the pullback, with investment declining by $80.4 million, while six other provinces and three territories recorded smaller losses.
Non-residential construction held relatively steady, dipping just 0.4 per cent to $6.8 billion. The industrial component experienced the sharpest decline, down 1.3 percent to $1.4 billion, due to decreases in Quebec and Ontario. Commercial construction slipped 0.5 per cent to $3.3 billion, with Ontario again leading the downturn. However, institutional building activity edged up by 0.2 per cent to $2.1 billion, with Alberta recording an $8.5 million increase that partially offset a $13.9 million loss in Quebec.
On a constant dollar basis, total construction investment fell 2.3 per cent from April but remained 3.1 per cent higher compared with May 2024.
The outlook for the remainder of 2025 will likely depend on broader economic conditions, particularly interest rate movements and housing demand trends.