Major revisions to Canada’s population estimates have erased two of three previously reported quarters of population decline, challenging one explanation for the recent drop in asking rents.

The revisions to previous estimates stretch back nearly five years to the fourth quarter of 2021. According to an analysis from Rentals.ca and Urbanation, the changes suggest new housing supply has played a bigger role in softening Canada’s rental market than previously believed.

The average asking rent in Canada was $2,035 in August, marking a 4.8 per cent year-over-year decline, according to the latest rental report from Rentals.ca.

 

Population decline largely disappears

 

Previous estimates showed Canada’s population declining for three consecutive quarters. The revised figures show only one modest quarterly decline — 7,225 people in the fourth quarter of 2025.

 

 

The biggest change came in the third quarter of 2025. An initially reported population decline of 76,068 was revised to an increase of 114,941.

Overall, the cumulative revision added 301,008 people to Canada’s estimated population as of the second quarter of 2026.

Year-over-year population growth from the first quarter of 2025 to the first quarter of 2026 was also revised substantially, from a decline of 0.5 per cent to an increase of 0.5 per cent.

 

Temporary residents drive the change

 

More than 90 per cent of the cumulative revision came from changes to estimates of net non-permanent residents, which were revised upward by 275,942 as of the second quarter of 2026.

According to the analysis, Statistics Canada attributed much of the increase to additional Immigration, Refugees and Citizenship Canada data on temporary residents whose permits had expired but remained in Canada while awaiting decisions on extensions.

Previously, those residents were counted as leaving Canada when their permits expired.

 

New rentals can affect older stock

 

The analysis also points to evidence that new rental construction can affect affordability beyond newly built units, which often enter the market at higher rents.

“A question often asked by policymakers is whether new-build market housing, often priced at the upper end of the market, supports improved housing affordability,” reads the report.

“A 7.6 per cent decline in average asking rents from the peak in May 2024, despite continued population growth and a significant increase in newly-completed rental buildings, suggests that increasing new supply, even at the upper end of the market, will lead to improved availability for more affordable rental units as well.”

 

 

CMHC data cited in the analysis shows vacancy rates have risen most in the highest-priced rent quartile, where new supply is concentrated, but vacancy rates across all four price quartiles have reached multi-year highs.

Rentals.ca and Urbanation say this supports the concept of “filtering”: higher-income renters move into newer, more expensive housing, freeing up units elsewhere in the market.

City-level population estimates have not yet been revised. However, the analysis found that cities where housing supply significantly outpaced population growth in 2024 and 2025 experienced larger decreases in asking rents.

 

What comes next

 

Urbanation president Shaun Hildebrand cautioned that many projects completing today were launched years ago, under different economic conditions.

“These revisions settle any debate. Building more housing improves affordability,” Hildebrand said.

He warned that falling rents and rising construction costs are making developers increasingly cautious about launching new projects.

“If projects aren’t viable to build at today’s rents, the pipeline will slow just as population growth picks up again, leaving us with another shortage by the end of the decade,” he said.

The analysis argues governments will need to address the economics of new construction to maintain the supply pipeline, pointing to permitting timelines, zoning reform, tax rebates and construction financing as potential policy levers.