OTTAWA — CIBC is sounding the alarm over the emerging vulnerabilities in Canada's housing market, indicating that these cracks could hinder the overall economy. The bank highlights that a decline in construction activity is prompting homeowners to become more cautious with their financial decisions, ultimately affecting consumer spending.

In a recently released report, CIBC's deputy chief economist, Benjamin Tal, pointed out that the current state of the housing market is insufficient to motivate builders to initiate new projects at the necessary pace. According to him, this slow pace is crucial for boosting the overall economy and addressing the pressing need for a housing supply injection.

The Canada Mortgage and Housing Corporation (CMHC) reported a 5.6 percent increase in housing starts for 2025. However, Tal contends that these statistics are outdated, often reflecting only those projects where construction is already significantly advanced. This discrepancy raises concerns about the actual state of new home construction and its potential to revitalize the housing market and, by extension, the broader economy.

Adding to the challenges facing the housing market, falling property values in various regions across Canada are likely to impact Canadians' perceptions of their financial stability. Tal notes that this decline in home values may lead many households to feel less wealthy and, consequently, more inclined to save their money rather than spend it, further straining economic activity.

On a more positive note, Tal suggests that the decreased home prices could benefit first-time buyers looking to enter the housing market. This demographic may find it easier to purchase homes amid declining prices, which could, in theory, stimulate some activity within the market.

Despite the advantages for first-time buyers, Tal cautions that this temporary relief is not a sustainable solution for the enduring issue of housing affordability. He emphasizes the urgency for all levels of government to take proactive measures aimed at reducing the cost of home buying. Such efforts are essential in order to provide the much-needed supply of housing across Canada.

The report was first published on February 18, 2026, by The Canadian Press. This timely examination of the housing landscape highlights CIBC's concerns over the future trajectory of the market and its accompanying impact on the national economy.

Companies mentioned in this context include CIBC, listed on the TSX under the ticker symbol CIBC. As the situation unfolds, stakeholders across the housing market will be watching closely to see how these economic indicators evolve and what strategies may be implemented to address these emerging challenges.

In conclusion, the insights provided by Benjamin Tal and the data from the CMHC suggest a complex interplay between housing market conditions, consumer behavior, and economic activity. CIBC's cautionary stance serves as a reminder of the vital importance of a robust housing market for the overall health of the Canadian economy.