Four years after the Progressive Conservatives promised to build 1.5 million homes in a decade, Ontario’s battered housing sector is looking at lowering expectations again.

As part of its 2022 re-election campaign, the Ford government promised it would solve Ontario’s housing crisis by ramping up the construction of new homes.

But it’s yet to come close to that target, even after adding in long-term care beds to try and boost the struggling statistics.

Ontario’s 2026 budget presents another round of bleak reading for those hoping the tide will turn. Private sector forecasts have, again, knocked tens of thousands of new units off their projections for the next four years.

Figures included in the fall economic statement released in November 2025 suggested Ontario would see 315,000 new housing starts from 2025 to 2028. That figure has dropped by more than 10 per cent to 276,900 in the latest budget.

“Construction activity softened and is expected to remain subdued in 2026 as private-sector forecasters continue to highlight the negative effects of uncertainty on homebuilding,” the government’s annual blueprint acknowledged.

The reductions have come across the board. Last year, the projections were revised from 71,800 down to 65,000, while 2026 is dropping from 74,800 to 64,800.

The figures essentially make Ontario’s goal of 1.5 million new homes by 2031 impossible.

The government had taken a staggered approach to its annual housing targets, seeking 110,000 new homes initially, a figure it broadly reached.

Those numbers then rose to needing 175,00 new homes from 2026 to 2031 to achieve the goal. The budget shows Ontario will struggle to even get close to that figure. In 2026, the forecasts say the province will manage 64,800 starts, with 70,300 in 2027 and 76,800 in 2028.

If those projections materialize, it would repeat its slump from 2025, when the government approached the end of the year more than 100,000 short of its target.

Increasingly, the government has been working to temper expectations.

Finance Minister Peter Bethlenfalvy referred last year to the goal of 1.5 million homes as a “soft” target. Housing Minister Rob Flack has said he is targeting the spring to see the impacts of recent policy changes.

Bethlenfalvy continued to distance himself from the goal during the 2026 budget.

“No, no, I’m not focused on the target,” he said when asked if it was still achievable. “I’m focused on what we can do today to make it more affordable for people to own homes.”

While new homebuilding has dropped dramatically, the resale market has also dipped substantially.

“Economic uncertainty has weighed on Ontario’s housing market activity despite easing mortgage rates,” the 2026 budget explained.

Last year, resales dropped 5.6 per cent and the average price fell by 4.4 per cent. That, forecasters believe, is temporary and will begin to reverse this year.

“Looking ahead, home resales are projected to rebound, supported by pent-up demand and economic growth,” the budget says. “Home resales are projected to grow 9.1 per cent in 2026, 5.6 per cent in 2027. 4.2 per cent in 2028 and 4 per cent in 2029.”

The government is hoping to take that improving resale picture and try to apply it to new construction through a billion-dollar-plus policy to try and stimulate the sector.

On the eve of the budget, the province announced it was expanding a plan to waive HST for first-time homebuyers on new projects to include anyone buying a new build.

For one year, anyone in Ontario who buys a new home will have the sales tax waived by both the federal and provincial governments. The measure is expected to cost the treasury $1.4 billion.

Announcing the plan, Premier Doug Ford implored people to take advantage and buy a new home.

“Let’s start selling these homes, let’s start building them,” he said in Mississauga on Wednesday. “And people of Ontario, please go out and purchase a new home.”

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