Could U.S. Lumber Tariffs Help Canada Build 4,000 More Homes a Year? CMHC’s Surprising Housing-Cost Analysis

Canada | October 16, 2026

U.S. tariffs on Canadian lumber are normally discussed as bad news for Canada’s forestry industry.

But Canada’s national housing agency has identified an unexpected possibility: if tariffs leave more Canadian wood available at home—and builders actually use more of it—some types of housing could become cheaper to construct.

Canada Mortgage and Housing Corporation, or CMHC, estimates that greater and more consistent use of domestically available wood products could potentially support about 3.5% more ground-oriented housing starts nationally, equivalent to close to 4,000 additional starts a year.

The potential effect is even larger in certain cities.

CMHC’s modelling suggests ground-oriented housing starts could increase by approximately:

Market	Potential increase in annual ground-oriented housing starts
Calgary	8.0%
Edmonton	6.1%
Ottawa	4.5%
Toronto	4.3%
Canada	3.5%

The same analysis says construction costs for detached houses and townhouses could be as much as 17% lower in some centres under its modeled scenario.

That sounds almost too good to be true.

And there is an important catch.

CMHC is not saying U.S. tariffs automatically reduce Canadian construction costs by 17% or guarantee 4,000 new homes.

Its argument is conditional.

For the benefit to materialize, more Canadian lumber would need to remain available domestically, distribution would have to improve, builders would have to use wood more effectively, and Canada would need to overcome transportation and internal-trade barriers.

So the real story is more interesting than the headline:

Can a trade dispute that hurts Canadian exporters simultaneously create cheaper building inputs for Canadian homebuilders?

Possibly.

But only if Canada can turn extra domestic lumber supply into actual housing construction.

The Quick Answer

U.S. tariffs make Canadian lumber more expensive for American buyers.

If that reduces U.S. demand, some Canadian wood products could remain in Canada.

Greater domestic supply could put downward pressure on lumber costs.

That matters most for:

detached houses;
townhouses;
other wood-intensive low-rise construction.

CMHC estimates that, under a scenario where wood-related input costs across major Canadian housing markets behaved more like those in Vancouver and Montréal, ground-oriented construction costs could be substantially lower in some cities and annual starts could rise around 3.5% nationally.

But lumber is only one component of building a home.

Labour, land, financing, infrastructure, development charges, steel, mechanical systems and approvals can still prevent a theoretically cheaper project from being financially viable.

What U.S. Tariffs Are Canadian Lumber Producers Facing?

The lumber trade relationship between Canada and the United States is unusually complicated because more than one trade measure can apply.

Canadian softwood lumber can face longstanding U.S.:

anti-dumping duties

and

countervailing duties.

Certain lumber and timber products are also subject to a separate 10% U.S. Section 232 tariff.

Global Affairs Canada confirms that where the same softwood product falls within both regimes, the Section 232 tariff is applied in addition to applicable anti-dumping and countervailing duties.

The exact burden is not identical for every exporter.

Current anti-dumping and countervailing duty rates vary by company and product coverage, which is why a single headline percentage should not be presented as the tariff on all Canadian lumber.

There are also other U.S. tariff measures affecting particular Canadian wood products, although products already subject to Section 232 measures are excluded from some of those additional tariff provisions.

For housing, however, the economic mechanism is straightforward.

If selling Canadian lumber into the United States becomes less attractive or less competitive, Canadian producers may look harder at their domestic market.

That is where CMHC sees an opportunity.

Why Cheaper Lumber Could Matter So Much for Canadian Housing

Not every home uses wood in the same way.

A downtown concrete apartment tower and a suburban townhouse project have very different material profiles.

CMHC says the share of construction costs associated directly with wood, plastics and composite materials is roughly 16 times larger in ground-oriented housing than in high-rise apartments.

That is why the potential benefit is concentrated in:

single-detached houses

and

townhouses.

For a high-rise condominium tower, cheaper framing lumber will not transform the entire project economics.

For a wood-framed subdivision or townhouse development, it can matter much more.

Canadian Home Construction Has Become Dramatically More Expensive

The potential savings need to be viewed against what happened over the past several years.

CMHC estimates that the cost of building homes across Canada’s largest housing markets has risen approximately 74% since 2019.

During the pandemic, wood-related materials were one of the biggest sources of inflation.

Between early 2020 and early 2023, CMHC’s analysis found the cost index for wood, plastics and composites increased about:

147%.

For comparison:

metal fabrications rose 66%;
concrete rose 54%;
structural steel framing rose 53%;
finishes rose 42%.

Anyone who tried to build or renovate during that period will remember the extraordinary lumber-price volatility.

But the pattern has now changed.

Lumber Is No Longer the Fastest-Rising Construction Input

One of the most interesting parts of the CMHC analysis is what happened after late 2024.

From Q4 2024 through Q2 2026, the price index for:

wood, plastics and composites increased 0%.

Concrete increased only about:

1%.

Meanwhile, other building systems became much more expensive:

Construction input	Change from Q4 2024 to Q2 2026
Utilities	+15%
Plumbing	+14%
HVAC	+13%
Metal fabrications	+13%
Structural steel framing	+8%
Wood, plastics and composites	0%
Concrete	+1%

CMHC says tariffs affecting steel, aluminum and manufactured components have shifted the sources of construction-cost pressure away from the pandemic-era lumber problem toward other materials and systems.

Statistics Canada provides a similar broader picture.

Residential construction costs across its 15-city composite rose 2.3% year-on-year in Q2 2026, while metal fabrications and structural-steel work were among the categories contributing to increases. Wood, plastics and composites recorded a quarterly decline.

That is an important distinction.

Canadian housing is still expensive to build.

But lumber is no longer necessarily the biggest inflation problem.

So Where Does the “17% Cheaper” Number Come From?

This figure needs careful explanation because it can easily be misused.

CMHC did not survey builders and discover that tariffs had already reduced complete house prices by 17%.

Instead, it created a counterfactual modelling scenario.

Vancouver and Montréal historically experienced smaller increases in wood-related construction costs than several other major Canadian cities.

CMHC asked:

What if other markets had experienced similar growth in wood, plastics and composite costs?

Under that scenario, total construction costs for ground-oriented housing could have been up to 17% lower in some centres.

That tells policymakers something useful about the potential value of cheaper domestic wood.

It does not mean a $600,000 new house will suddenly cost $498,000 because of tariffs.

Land, taxes, financing, developer margins and other non-construction costs remain.

Why Calgary Could Benefit the Most

CMHC estimates that lower wood-related construction costs could potentially increase ground-oriented housing starts in Calgary by around 8% annually.

Edmonton follows at approximately 6.1%.

Toronto and Ottawa are both around 4%–5%.

Why the difference?

Construction markets have different:

material costs;
housing types;
land costs;
labour markets;
development economics.

A reduction in material costs can push a marginal project from:

“does not make financial sense”

“worth building.”

That effect can be particularly important for ground-oriented housing, where many projects have become difficult to make financially viable.

What Does “4,000 More Homes” Actually Mean?

The figure refers to approximately 4,000 additional annual ground-oriented housing starts under CMHC’s modeled scenario.

It is not 4,000 government-funded houses.

It is not a commitment from builders.

And it is not 4,000 homes already under construction.

Housing starts measure the beginning of construction.

CMHC estimates that cost improvements could make enough additional projects viable to lift ground-oriented starts around 3.5% nationally.

That makes the figure economically useful—but it should not be reported as a guaranteed outcome.

Canada Needs Far More Than 4,000 Additional Homes

This also needs perspective.

CMHC's broader housing-supply analysis says Canada would need roughly 417,000 to 469,000 housing starts annually by 2036 to restore housing affordability to pre-pandemic levels.

So even if the lumber opportunity produced nearly 4,000 extra ground-oriented starts every year, it would not solve the national housing shortage.

It would help.

But the scale of Canada’s supply challenge is much larger.

Affordable housing ultimately depends on:

construction capacity;
planning approvals;
serviced land;
infrastructure;
financing;
development charges;
skilled labour;
housing density.

Cheaper lumber tackles only one part of that equation.

The Transportation Problem Could Stop the Savings

Canada produces enormous quantities of wood.

But timber does not automatically appear cheaply at a construction site thousands of kilometres away.

CMHC identifies east-west transportation infrastructure as one of the barriers to making greater use of Canadian wood domestically.

This is especially important because production and housing demand are not always in the same place.

A Canadian mill may have surplus product.

A developer in another province may need it.

Between them are:

rail costs;
trucking;
warehousing;
logistics;
provincial rules;
procurement systems.

If transportation absorbs the potential material saving, the builder gains very little.

That is why CMHC also points to efforts to reduce internal trade barriers and improve domestic transportation networks.

Could Mass Timber Create a Bigger Opportunity?

CMHC also highlights mass timber as one possible way to use more domestically produced wood.

Mass-timber systems use engineered wood components for structural construction and can extend the use of timber beyond conventional single-family framing.

That potentially opens more applications in:

multifamily buildings;
institutional construction;
commercial buildings;
mid-rise development.

Canada already permits and uses various forms of mass-timber construction, but adoption remains relatively limited compared with some international markets.

If domestic wood becomes more competitively priced, developers could have more incentive to consider these systems where building codes, engineering and project economics allow.

But material substitution should always be engineering-led.

A developer should not redesign a building around timber merely because lumber is temporarily cheaper.

What Does This Mean for Canadian Homebuyers?

Do not expect to walk into a sales centre next month and see a 17% price cut.

Any construction-cost benefit would probably move through the market gradually.

A developer may use savings to:

make a previously shelved project viable;
reduce the size of a planned price increase;
offer incentives;
improve margins;
start another phase sooner.

How much ultimately reaches the homebuyer depends on competition.

If builders have plenty of buyers chasing few homes, lower material costs may not translate directly into lower sale prices.

If developers are competing aggressively for limited buyers, savings are more likely to appear through prices or incentives.

What Does It Mean for Homebuilders?

For builders of detached homes and townhouses, the story is more immediately relevant.

Material procurement can significantly affect project feasibility.

Builders should watch:

domestic SPF lumber pricing;
engineered-wood products;
local supplier inventories;
delivery costs;
framing-system options.

But locking in materials too early also carries risk.

Lumber must be stored correctly.

Prices can continue falling.

Designs can change.

The more sensible strategy is usually coordinated procurement based on an approved design and actual construction schedule rather than speculative stockpiling.

Could Canadian Lumber Prices Fall Further?

They could, particularly if U.S. trade measures meaningfully reduce export demand.

But there is no guarantee.

Canadian supply can also be affected by:

mill shutdowns;
wildfire risk;
harvesting restrictions;
transportation disruptions;
currency movements;
domestic demand.

If producers respond to weak exports by cutting production significantly, the amount of surplus material available inside Canada could shrink.

That is another reason the CMHC scenario should not be treated as a simple prediction of permanently cheap lumber.

What Does This Mean for the United States?

The same policy can produce almost the opposite effect on the other side of the border.

If tariffs make Canadian lumber more expensive for U.S. importers, American builders can face higher input costs unless domestic production or alternative suppliers fill the gap.

Canada has historically been an important supplier of softwood lumber to the U.S. housing industry.

A tariff therefore creates two possible effects:

Canada: more wood may remain available domestically.

United States: imported Canadian wood may become more expensive.

This illustrates one of the basic economic tensions of trade policy.

A measure designed to protect one domestic industry can raise costs for downstream users that depend on the imported product.

Does This Mean U.S. Home Prices Will Rise?

Not automatically.

Lumber is only one part of the total cost of a U.S. home.

Land, labour, financing, permits and infrastructure also matter.

Builders can also:

change suppliers;
adjust designs;
negotiate;
reduce margins;
substitute materials.

But sustained higher lumber costs can make some projects more expensive, particularly wood-intensive single-family housing.

That can matter most in markets where project margins are already tight.

Why This Is Bigger Than a Lumber Story

The deeper issue is how countries respond when international trade becomes less predictable.

Canada has traditionally exported enormous amounts of resources.

If access to its largest foreign market becomes more expensive, policymakers and industry have an incentive to ask:

Can more of those materials be used to solve domestic problems?

Housing is an obvious candidate.

Canada simultaneously has:

a major forestry sector;
high housing construction costs;
a severe housing-supply challenge.

Connecting those three parts more efficiently is the opportunity CMHC is highlighting.

But Tariffs Are Still a Net Economic Risk

CMHC is careful on this point.

Its analysis does not argue that tariffs are good for Canada overall.

It explicitly says U.S. trade measures can hurt Canada's economy, employment and industries that provide inputs to residential construction.

The housing opportunity is better described as:

finding a domestic advantage inside a damaging trade environment.

Canadian lumber exporters can lose sales and jobs even while Canadian builders potentially gain access to cheaper material.

Both things can be true simultaneously.

What Construction Costs Are Still Rising?

Even if lumber stays stable, Canadian builders face pressure elsewhere.

Statistics Canada reported that residential construction costs across its major-city composite were still 2.3% higher year-on-year in Q2 2026.

Builders cited pressures including:

fuel;
transportation;
skilled labour;
tariff-related supply disruptions.

That is why lower wood costs cannot single-handedly restore housing affordability.

A townhouse can use cheaper framing lumber and still become more expensive overall if:

plumbing + HVAC + metals + labour + financing

rise faster.

A Practical Example

Imagine a townhouse developer is considering a 100-unit project.

The land is already owned.

Planning approval is available.

But construction pricing makes the expected return too low, so the developer delays.

If lower wood costs reduce the project budget enough to restore an acceptable margin, construction may begin.

That creates:

100 housing starts that otherwise might have been postponed.

That—not a dramatic reduction in every existing home price—is the mechanism behind CMHC's argument.

Small changes in construction economics can release marginal projects.

Across Canada, those projects could add up.

Why Ground-Oriented Housing Matters to Families

Much of Canada's recent housing construction has been concentrated in multifamily housing.

CMHC has warned that ownership-oriented construction is weakening in many major markets, while rental construction plays a growing role.

Detached houses and townhouses remain particularly attractive to many:

families with children;
first-time buyers seeking more space;
buyers moving from apartments.

Yet they have also become difficult to build affordably.

That is why reducing wood-intensive construction costs may matter beyond the raw number of starts.

It could support a type of housing that has become increasingly scarce in expensive metros.

What Should Canada Do If More Lumber Stays Home?

The CMHC analysis suggests the opportunity will require more than simply waiting for lumber prices to fall.

Canada would need to improve the domestic housing supply chain.

That means:

Better east-west transportation so lumber can move efficiently from producing regions to high-demand housing markets.
Reduced provincial trade barriers where they make material movement or procurement unnecessarily complicated.
More standardized construction systems that can use Canadian wood at scale.
Expanded mass-timber capability where technically and economically appropriate.
Faster housing approvals, because cheap lumber is useless if a project waits years for permission.
Greater construction productivity so material savings are not lost through labour and scheduling inefficiencies.

The opportunity therefore sits at the intersection of trade, construction and housing policy.

Is This Good News for Canada’s Housing Crisis?

It is potentially useful news.

It is not a solution.

CMHC has said Canada needs 417,000–469,000 annual starts to restore affordability toward pre-pandemic levels by 2036.

The roughly 4,000 additional ground-oriented starts in its lumber scenario are meaningful—but small compared with that national requirement.

The best interpretation is:

Canada needs every credible construction-cost saving it can find.

Cheaper domestic wood could be one of them.

Faster approvals could be another.

Lower development costs could help.

More efficient construction could help.

None is sufficient alone.

Together, they can change project economics.

Frequently Asked Questions

Could U.S. lumber tariffs really help Canada build more homes?

Potentially. CMHC estimates that if more Canadian wood remains available domestically and its use becomes more consistent, annual ground-oriented housing starts could increase by roughly 3.5%, or close to 4,000 starts per year. It is a modeled scenario, not a guaranteed forecast.

Could Canadian construction costs really fall 17%?

CMHC says ground-oriented housing construction costs could be up to 17% lower in some centres under its counterfactual scenario in which wood, plastics and composite input-cost growth behaves more like Vancouver and Montréal. It does not mean every new Canadian home will become 17% cheaper.

Which Canadian cities could benefit most?

CMHC estimates potential increases in ground-oriented starts of around 8% in Calgary, 6.1% in Edmonton, 4.5% in Ottawa and 4.3% in Toronto.

What U.S. tariff applies to Canadian softwood lumber?

Certain Canadian timber and softwood-lumber products are subject to a 10% U.S. Section 232 tariff. Applicable anti-dumping and countervailing duties may also apply, with rates varying by exporter and product.

Are the U.S. lumber tariff and anti-dumping duties added together?

For products that fall within both measures, Global Affairs Canada says the Section 232 tariff applies in addition to applicable anti-dumping and countervailing duties.

Will cheaper lumber solve Canada’s housing shortage?

No. CMHC estimates Canada needs around 417,000–469,000 annual housing starts to restore affordability toward pre-pandemic levels by 2036. Lumber costs are only one part of the housing-supply problem.

Final Takeaway

The idea sounds backwards:

America taxes Canadian lumber, and Canada builds more homes.

But economically, there is a plausible route.

If U.S. tariffs reduce demand for Canadian wood, more material may remain in Canada.

If that additional supply restrains lumber prices, wood-intensive houses and townhouses become cheaper to construct.

If projects become financially viable as a result, developers build more of them.

That is how CMHC arrives at the possibility of close to 4,000 additional ground-oriented housing starts per year.

But there are several “ifs” in that chain.

Canada has to move lumber efficiently across provincial boundaries.

Builders have to use it.

Production cannot fall so much that the domestic supply advantage disappears.

And savings on wood cannot be entirely swallowed by higher labour, plumbing, HVAC, steel, financing or development costs.

So the most accurate headline is not:

“U.S. tariffs will create 4,000 Canadian homes.”

It is:

“U.S. lumber tariffs may create an opportunity for Canada to build some homes more cheaply—if Canada can turn surplus domestic wood into actual construction.”

That distinction matters.

Trade policy alone cannot solve Canada's housing shortage.

But if an export barrier leaves Canada with more of one of the world's most important building materials, using that resource more intelligently at home may be one of the few constructive outcomes available from an otherwise costly trade dispute.

U.S. Lumber Tariffs Could Help Canada Build 4,000 More Homes, CMHC Says