Canada’s housing shortage is no longer just an affordability problem. It is increasingly a constraint on economic growth, labour mobility, and the ability of cities to function effectively. Despite record levels of construction employment and investment, housing supply continues to fall far short of what Canadians need.

The core problem lies in a sustained decline in residential construction productivity. Employment has surged, but housing output per worker has steadily declined.

This report examines the productivity of residential housing construction in Canada. Its central finding is clear: while some commonly cited measures suggest productivity has improved, they are poorly suited to housing policy. In dollar terms, value added in residential construction has risen modestly. But measured in physical terms – such as homes completed per worker or per hour worked – productivity has been falling for decades.

This gap between value-based and volume-based productivity measures lies at the heart of Canada’s housing challenge. It also explains why record levels of construction employment have coincided with historically weak growth in housing completions. The industry has become more productive at building homes that are larger or include improved, higher-end amenities. However, its efficiency in building housing in large numbers has worsened.

Expanding the workforce without addressing underlying inefficiencies will not resolve the housing shortage. It risks entrenching a low-productivity equilibrium in which additional labour raises costs without a commensurate increase in the volume of homes.