Construction productivity has fallen sharply

Canada’s homebuilding sector is producing much less per worker than it did two decades ago, even as the country says it needs many more homes. (www150.statcan.gc.ca) A Statistics Canada study released on February 25, 2026 found labour productivity in residential construction fell 37.3% from 2001 to 2023, an average drop of 2.1% a year. The study measured productivity as real gross output per worker. (www150.statcan.gc.ca) The industry is dominated by small firms: companies with fewer than 20 employees accounted for 66.1% of residential construction employment in 2023, and those smaller firms drove most of the decline. Firms with fewer than five employees and firms in Ontario were singled out as major contributors. (www150.statcan.gc.ca) Productivity, in plain terms, is how much housing gets built for each worker or hour on the job. When that number falls, builders need more labour time to deliver the same home, which pushes up costs and slows supply. (www.csls.ca) A separate December 19, 2025 report by the Centre for the Study of Living Standards, prepared for Canada Mortgage and Housing Corporation, found residential construction labour productivity has fallen 3.8% a year since 2019. That report said the sector now produces housing “more slowly and at significantly higher cost.” (www.csls.ca) The same report estimated the post-2019 productivity drop added C$6.0 billion to C$7.7 billion to the cost of new housing between 2019 and 2024. In 2024 alone, it put the added cost of falling productivity at C$24,000 to C$31,000 for the average newly built home. (www.csls.ca) Canada is still starting a large number of homes, but the pace is below the level many analysts say is needed. Canada Mortgage and Housing Corporation’s trend measure of housing starts was 256,005 units in February 2026. (www.cmhc-schl.gc.ca) The Centre for the Study of Living Standards said Canada will not meet targets of more than 400,000 housing starts a year without a sharp improvement in productivity. Its report pointed to digital tools, off-site and modular building, faster permitting, and more skilled-worker recruitment and training as ways to raise output. (www.csls.ca) Canada Mortgage and Housing Corporation has also been warning that supply problems are tied to “prolonged construction timelines caused by various supply-side challenges.” In its Spring 2024 Housing Supply Report, the agency said more homes and a wider mix of housing types are needed to reduce pressure on prices and rents. (www.cmhc-schl.gc.ca) The thread running through both reports is simple: Canada’s housing problem is not only about financing demand or zoning more land. The crews, firms, timelines and methods used to build homes are delivering less output than they used to. (www150.statcan.gc.ca)