CONSTRUCTION MARKET OVERVIEW
Activity variable by sector
Construction GDP ticked up in Q2 2026 by 1.0% following two consecutive quarterly declines. Growth was driven by engineering (+2.0%) and residential (+1.5%) construction, with ongoing infrastructure investment and resilient housing activity visible in several provinces. Meanwhile, non-residential construction fell by 0.5% in Q2 and repair (-0.2%) continued to soften, with the latter recording it’s fourth quarterly decline in a row.
Source: Statistics Canada
Investment in building construction, a key indicator of construction activity in Canada, increased by 1.1% on the quarter and 2.7% on the year in Q2 2026. While overall construction activity remains positive, performance varies considerably across sectors and asset classes as developers, investors and public bodies respond differently to current market conditions, evolving priorities and heightened economic and geopolitical uncertainty.
Source: Statistics Canada
At first glance, residential construction seems to have regained some ground in Q2 2026, rising by 1.7% and 3.4% on the quarter and year, respectively. This was primary led by activity in single-family dwellings, which increased by 7.1% on the year compared with just 0.4% growth for multiple dwellings.
However, rather than signaling a broader recovery in single-family housing, much of the recent gain appears to be concentrated in Quebec and driven by local market conditions. Regional variability may, in fact, become a more common theme in residential construction looking forward as local governments and municipalities implement their own distinct housing policies. Another contributing factor is the filtering through of last year’s strong housing starts, which spiked in 2025 Q2.
Still, multiple-dwelling construction has remained the primary source of residential activity since mid-2023, accounting for 55.5% of total residential investment year-to-date with increased attention from policymakers towards affordable housing.
Growth in non-residential construction was overall more moderate, increasing by 1.2% on the quarter in Q2 2026, supported primarily by commercial activity, which represents roughly half of the activity in the space. Investment in commercial construction increased by 2.2% on the year with activity in the office and retail space making up the bulk of it. Institutional and governmental construction trailed behind with growth of 0.6%, while industrial investment declined by 0.4% compared with a year earlier.
Beyond these recent movements, one of the more notable shifts within the market has been the growing reliance on institutional construction within the non-residential sector. Since 2022, its share of total non-residential investment has grown from just under 26.0% to more than 30.0%, reflecting rising investment in healthcare, education and other public infrastructure initiatives.
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