Budget 2026: What It Means for Housing / Construction

Sector Impact Summary

The housing and construction sector faces a significant cyclical downturn in Budget 2026. Housing starts are forecast to moderate to 40,000 units in 2026, down from an all-time high of nearly 55,000 units in 2025 -- a decline of approximately 27%. The slowdown is driven by sharply decelerating population growth (from 2.5% to 1.1%) as federal immigration policy changes reduce newcomer inflows, and by the completion of apartment projects started during the recent construction boom. Over the medium term, housing starts are expected to settle around 35,000 units.

The government's primary response is supply-side capital investment. The Affordable Housing Partnership Program receives $768 million over three years to support the goal of creating 13,000 affordable housing units under the Stronger Foundations strategy, of which 6,856 have been delivered since the 2021 launch. The Continuing Care Capital Program receives $923 million for facility construction and expansion. The Lodge Modernization Program adds $150 million, and the Indigenous Housing Capital Program contributes $75 million.

Government construction spending on schools, hospitals, and housing is identified as a crucial stabilizer for the construction industry, partially offsetting the decline in private residential activity. The Assisted Living and Social Services ministry total expense rises 6% to $12,233 million, with the three-year capital allocation at $2,240 million. However, no new demand-side housing affordability measures were announced, and real residential investment is forecast to edge only 0.7% higher in 2026.

Key Budget Measures

Housing Starts Forecast

Alberta housing starts are forecast to moderate to 40,000 units in 2026, down from an all-time high of nearly 55,000 units in 2025. Starts are projected to settle around 35,000 units over the medium term, reflecting slower population growth and the completion of apartment projects.

Affordable Housing Partnership Program

$768 million over three years supports the goal of creating 13,000 affordable housing units under the Stronger Foundations strategy. Since the 2021 launch, 6,856 units have been delivered.

Continuing Care Capital Program

$923 million over three years for continuing care facility construction and expansion, addressing alternate level of care pressures in hospitals by expanding bed capacity.

Lodge Modernization Program

$150 million over three years to build and modernize seniors' lodges.

Indigenous Housing Capital Program

$75 million over three years to construct, purchase, or redevelop housing for Indigenous peoples.

Family, Social Supports and Housing Capital Envelope

$1,078 million over three years for affordable housing and social supports. Combined with capital maintenance and renewal funding, the total reaches nearly $1.3 billion.

Women's Shelters Capital Upgrades

$4 million in new funding to upgrade women's shelters.

Funding Changes

Item	2025-26 Forecast ($M)	2026-27 Budget ($M)	Change (%)
Assisted Living and Social Services total expense	11,540	12,233	+6.0%
Assisted Living and Social Services capital (three-year)	N/A	2,240	N/A

Capital Investment

Project	Three-Year Total ($M)
Continuing Care Capital Program	923
Affordable Housing Partnership Program	768
Seniors Facilities and Housing Capital Maintenance and Renewal	155
Lodge Modernization Program	150
Indigenous Housing Capital Program	75
Bethany Continuing Care Centre (Calgary)	75
Good Samaritan Society Continuing Care (Edmonton)	63
Pine Grove Manor	14
Women's Shelters capital upgrades	4

Risks

Housing starts declining 27% from 2025 peak (High). The moderation from nearly 55,000 to 40,000 units represents a significant contraction in residential construction activity, with further decline to 35,000 units expected over the medium term.

Population growth slowdown (High). Population growth is decelerating sharply from 2.5% in 2025 to 1.1% in 2026, driven by federal immigration policy changes reducing newcomer inflows. This directly impacts housing demand and construction sector employment.

Construction sector headwinds (Medium). Non-residential construction activity continues to decline after peaking in spring 2025, though government spending on schools, housing, and hospitals provides support.

Affordability pressures persist (Medium). Despite slowing population growth, housing affordability remains a challenge. The 13,000 affordable housing unit target under Stronger Foundations since 2021 has so far delivered only 6,856 units -- approximately 53% of the goal.

Opportunities

Government construction spending as stabilizer (High). Increased provincial spending on schools, supportive housing, and hospital projects is a bright spot for the construction sector, partially offsetting the decline in private residential activity and supporting construction employment.

Stronger Foundations affordable housing acceleration (High). $768 million over three years for the Affordable Housing Partnership Program provides sustained investment to accelerate delivery toward the 13,000-unit target.

Continuing care expansion (High). $923 million for the Continuing Care Capital Program supports construction of new facilities and bed capacity, addressing a critical need while generating construction activity.

Renovation spending recovery (Medium). Renovation spending is set to turn a corner after several years of decline, supporting residential investment alongside the moderation in new housing starts.

Multi-unit dwelling demand sustained (Medium). Inventories of multi-unit dwellings in Edmonton and Calgary remain relatively low, supporting continued apartment and condo construction even as overall starts moderate.

What's Missing

• No new demand-side housing affordability measures for homebuyers
• Affordable housing target of 13,000 units remains from 2021 with only 6,856 delivered to date (53%)
• No explicit measures to address rental affordability despite elevated demand from newcomers
• Real residential investment forecast to edge only 0.7% higher in 2026
• No new housing-related tax incentives or first-time buyer programs announced

Net Assessment

Housing and construction faces a clear cyclical downturn with housing starts dropping 27% from peak levels. The government's response is focused on supply-side capital investments: $768 million for affordable housing, $923 million for continuing care, and $150 million for lodge modernization. Government construction spending on public infrastructure provides crucial support to the industry during the private sector downturn. However, the absence of demand-side affordability measures and the slower-than-target pace of affordable housing delivery (53% of the 13,000-unit goal since 2021) indicate that housing accessibility remains an unresolved challenge.