A new report from the C.D. Howe Institute finds that Canada is not building homes fast enough to meet rising need, with red tape and low productivity intensifying pressures on the sector.

The report explores how construction technologies could help accelerate delivery and improve efficiency — if supported by the right policy conditions.

In “Building Smarter, Faster: Technology and Policy Solutions for Canada’s Housing Crisis,” report author Tasnim Fariha outlines how innovative construction technologies – such as modular and panelized systems, and mass timber – can enhance labour productivity in residential construction. While these approaches are not a silver bullet, they may offer valuable tools for increasing housing supply and managing construction workforce constraints.

“Canada is facing a growing labour shortage and serious construction productivity challenges, which could have long-term consequences for our economic growth,” says Fariha. “This kind of innovative construction addresses these challenges by allowing workers to produce more within the same amount of work hours.”

Canada Mortgage and Housing Corporation estimates Canada needs to start building at the least 430,000 units annually to restore affordability of 2019 level, but only 245,000 homes were started last year. At the same time, nearly 260,000 construction workers, are expected to retire by 2030, compounding the strain. Factory-based approaches can shift up to 60 percent of the building process off-site, offering greater control over costs, timelines, and labour use.

“Scandinavian countries like Sweden have made extensive use of modular and mass timber construction, backed by coordinated policies and supply chain support,” says Fariha. “In comparison, Canada has moved slowly, with fragmented standards and limited incentives for adoption.”

The report calls on governments at all levels to create the conditions necessary for innovation to thrive. To unlock their full potential, it calls for targeted financial tools to incentivize investors, as well as streamlined permitting, harmonized building code interpretations, and workforce training support.