Canada’s housing crisis has become one of the country’s most persistent economic and social challenges. Rising home prices, limited rental availability, and growing affordability pressures have pushed housing policy to the centre of federal decision-making. In response, the federal government announced Build Canada Homes (BCH) as a new national housing agency under Budget 2025, positioning it as a long-term supply solution.
In December 2025, the Parliamentary Budget Officer (PBO) released an independent assessment of BCH and the broader outlook for federal housing programs. The report provides a rare, non-political evaluation of how much housing the new agency can realistically deliver, how it fits within federal fiscal plans, and what trade-offs accompany its introduction.
This article presents a comprehensive, fact-focused analysis of the PBO’s findings, explaining what Build Canada Homes is, how it is funded, how many homes it may add, and how it compares to Canada’s overall housing needs.
The Federal Housing Context Before Build Canada Homes
To understand Build Canada Homes, it is essential to examine the broader federal housing funding landscape in which it is being introduced.
According to the PBO, total planned federal spending on housing programs is projected to decline sharply over the next several years. Federal housing program expenditures are estimated to fall from approximately $9.8 billion in 2025–26 to $4.3 billion by 2028–29. This represents a 56% reduction in federal housing spending.
This decline is not the result of a single policy decision but rather the combined effect of:
The expiry of time-limited housing programs
Reductions announced under Budget 2025
A shift away from certain affordability supports toward capital-focused initiatives
The PBO makes it clear that Build Canada Homes does not reverse this downward spending trend. Instead, BCH operates within a shrinking overall housing budget.
What Is Build Canada Homes?
Build Canada Homes is a newly established federal housing delivery agency designed to play a more direct role in housing supply creation than previous federal programs.
The agency’s mandate includes three primary activities:
Direct construction of housing
Supporting construction projects through funding and financing
Supporting housing acquisitions, particularly by non-profit and community housing providers
Unlike earlier programs that relied primarily on incentives or partnerships, BCH introduces a more hands-on federal presence in housing development.
Funding Structure of Build Canada Homes
Accrual vs. Cash Spending
The PBO distinguishes between two types of BCH spending:
Accrual-based spending, which reflects the economic cost of programs over time
Cash expenditures, which include loans, asset development, and upfront financing
Over the five-year period from 2025–26 to 2029–30, BCH is projected to incur approximately $7.3 billion in accrual spending, of which $6.7 billion is new funding.
When cash flows are included, total planned BCH expenditures rise to approximately $13.0 billion.
This distinction matters because cash spending figures may appear larger, but accrual spending better reflects the long-term fiscal impact.
Allocation of Build Canada Homes Funding
The PBO outlines how BCH’s accrual spending is allocated across program areas:
Canada Rental Protection Fund — $625 Million
This funding is intended to help non-profit housing providers acquire existing rental buildings that are at risk of:
Conversion to ownership
Renoviction
Significant rent increases
The goal is to preserve existing rental stock rather than create new units.
Transitional and Supportive Housing — $1.0 Billion
This portion of BCH funding supports housing for individuals and households with complex needs, including:
People experiencing homelessness
Individuals requiring supportive services
Transitional housing residents
These units typically serve households with incomes well below market levels.
Affordable Housing Grants, Contributions, and Loan Concessions — $5.4 Billion
The largest share of BCH funding is directed toward non-market and below-market housing supply, including:
Purpose-built rental housing
Community housing projects
Affordable housing developments led by public or non-profit entities
These funds are designed to lower project costs and improve feasibility rather than generate profit.
Estimated Housing Supply Impact of Build Canada Homes
One of the most important questions surrounding BCH is how many homes it will actually produce.
Using cost assumptions from comparable CMHC housing programs, the PBO estimates that BCH could support the construction or acquisition of approximately 25,700 housing units over five years.
This estimate covers the period from 2025–26 to 2029–30 and represents the total number of units across all BCH funding streams.
Contribution to National Housing Supply
When compared to overall housing construction levels, the PBO estimates that BCH would increase national housing completions by approximately 2.1% relative to its baseline forecast.
This figure is important for context. While 25,700 units is meaningful in absolute terms, it represents a modest increase relative to national construction volumes.
Build Canada Homes and the Long-Term Housing Gap
The PBO has previously estimated that Canada faces a housing gap of approximately 690,000 units by 2035 if affordability is to return to pre-pandemic levels.
Against this benchmark:
BCH’s estimated 25,700 units would address approximately 3.7% of the projected gap
This comparison highlights that BCH alone cannot resolve Canada’s housing shortage. Instead, it represents one component of a broader policy mix.
Affordability Breakdown of BCH-Supported Units
The PBO provides a detailed breakdown of the expected affordability levels of BCH-supported housing.
Based on its estimates:
Approximately 6,300 units would be affordable to very low-income households
Approximately 6,700 units would be affordable to low-income households
Approximately 1,600 units would target moderate-income households
Approximately 1,600 units would be affordable at median income levels
Remaining units include housing without specific affordability commitments
In total, roughly half of all BCH-supported units are expected to serve low-income or very low-income households.
Emphasis on Non-Market Housing
A key finding of the PBO report is that BCH funding is not primarily aimed at the private market.
Instead, the agency’s design favours:
Non-profit housing providers
Public or community housing entities
Projects with long-term affordability commitments
This distinguishes BCH from policies aimed at stimulating private market supply through zoning changes or tax incentives.
Shift Away From Short-Term Affordability Supports
Perhaps the most consequential insight in the PBO report concerns policy trade-offs.
As capital investment in BCH increases, several programs that provide immediate affordability relief to households are expiring or being reduced. These include:
The Canada Housing Benefit
Federal funding for existing social housing
Time-limited CMHC affordability programs
The PBO emphasizes that while supply-side investments improve housing availability over time, they do not replace income-based supports that help households manage housing costs in the short term.
Timing Mismatch Between Supply and Affordability
Housing construction takes years to plan, approve, and complete. As a result, BCH-supported units will enter the market gradually.
At the same time, reductions in household supports take effect immediately when programs expire. This creates a timing mismatch where affordability pressures may intensify before new supply becomes available.
The PBO highlights this as a key risk in the current policy approach.
Impact on CMHC and Program Capacity
The report also examines how Budget 2025 affects Canada Mortgage and Housing Corporation (CMHC).
According to the PBO:
Budget 2025 includes $2.4 billion in housing-related reductions between 2026–27 and 2029–30
Ongoing reductions of approximately $860 million per year are projected beyond that period
If CMHC’s existing social housing obligations are treated as non-discretionary, these reductions may limit funding for other housing initiatives.
Federal Role Versus Provincial and Municipal Action
While the PBO report focuses on federal programs, it implicitly reinforces a broader reality: housing supply is not controlled by Ottawa alone.
Land-use planning, zoning, development approvals, and infrastructure provision remain largely within provincial and municipal jurisdictions. As a result, BCH’s effectiveness will depend heavily on coordination with other levels of government.
What the Numbers Clearly Show
Based on the PBO’s analysis:
Build Canada Homes introduces a new federal delivery mechanism
The scale of BCH is limited relative to Canada’s housing shortage
Total federal housing spending is declining, not expanding
BCH prioritizes deep affordability, particularly for low-income households
Near-term affordability supports are being reduced as long-term supply programs ramp up
Final Assessment
The PBO’s evaluation of Build Canada Homes provides a clear, data-driven perspective on federal housing policy under Budget 2025. BCH represents a structural shift toward more direct federal involvement in housing supply, particularly in the non-market sector.
However, the numbers indicate that BCH is incremental rather than transformative. Its projected housing output is meaningful but modest, and it operates within a broader context of declining federal housing spending and reduced short-term affordability supports.
For policymakers, housing advocates, and market participants alike, the report underscores a fundamental reality: housing outcomes depend not only on how many homes are built, but also on who they serve, when they become available, and what supports remain in place for households today.
Ref:
Build Canada Homes and the Outlook for Housing Programs under Budget 2025: A new report by the Parliamentary Budget Officer (PBO)
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