Canada needs more homes. It needs them urgently, at prices that ordinary families can afford.

Yet with governments and the homebuilding industry struggling to address a deepening housing shortage, a troubling combination of tariffs, soaring diesel prices and the loss of galvanized steel production in Hamilton threatens to push the cost of building homes even higher.

The consequences should concern anyone hoping to buy a home or rent an apartment.

Building homes is becoming more expensive at precisely the time Canada needs to build more of them.

Together, these pressures threaten to slow construction, undermine investment and add another layer of costs to an already unaffordable housing market.

 

Tariffs disrupt an integrated supply chain

 

The U.S.-Canada tariff war is a case in point. Residential construction depends on a closely integrated North American supply chain, with materials and manufactured components crossing the border in both directions. Tariffs and counter-tariffs disrupt that system, increase the delivered cost of materials and force builders to reconsider budgets, suppliers and project schedules.

The list of affected products is extensive. Structural steel, reinforcing bar, fasteners, lumber, engineered wood, flooring, heating and cooling systems, elevators, electrical equipment and appliances are among the materials and components that face higher costs or supply disruptions.

These are not optional extras. They are essential to building homes.

Estimates from the Residential Construction Council of Ontario (RESCON) indicate that measures introduced on Sept. 8 could add $9,000 to $14,000 to the cost of a typical Ontario detached home and $18,000 to $20,000 to a mid-rise unit. Those increases come on top of an estimated $15,000 to $25,000 in additional costs associated with earlier measures introduced in March 2025.

For developers already contending with high land prices, financing costs, development charges, labour shortages and regulatory hurdles, these increases are difficult to absorb. Most projects operate on tight margins, and builders cannot indefinitely shoulder escalating expenses.

The eventual bill lands with homebuyers and renters.

 

Diesel costs hit every stage of construction

 

Then there is diesel.

Diesel is a fundamental input in construction. Excavators, bulldozers, loaders, cranes, dump trucks and other heavy equipment depend on fuel to prepare sites, dig foundations, move earth and transport materials. When diesel prices surge, every stage of construction becomes more expensive.

The effects extend well beyond the construction site. Aggregates such as sand, gravel and crushed stone must be hauled to projects. Cement and concrete production and delivery are energy-intensive, as are asphalt and precast concrete products. Higher fuel costs also affect the transportation of steel, lumber and other building supplies. Petroleum prices can put additional pressure on petrochemical-based products, including insulation, piping and waterproofing membranes.

With diesel prices up 70 per cent or more from a year earlier, the financial consequences are substantial. Higher fuel bills squeeze contractors working under fixed-price agreements.

Eventually, those costs show up in new bids, equipment charges and material prices. Contractors may demand fuel surcharges or escalation clauses, while some may decline to bid on projects where the financial risks are too great. Fewer bidders and more expensive bids mean higher construction costs and longer delays.

 

Losing domestic galvanized steel

 

The third pressure — Stelco’s decision to indefinitely idle its cold-rolled and galvanized steel lines — is particularly significant for Hamilton and the broader Ontario housing industry.

Galvanized steel, which is coated to resist corrosion, is used in steel studs and framing, heating and ventilation ductwork, roofing, flashing, siding trim, joist hangers, connectors and floor and roof decking. These products are integral to residential construction, particularly in mid-rise and high-rise buildings that rely heavily on steel components.

With Stelco’s production halted and ArcelorMittal Dofasco reportedly rationing orders, builders and distributors face fewer domestic supply options. The result will be higher material costs, longer lead times and delays as builders search for supplies.

 

An industry already falling short

 

All of this is unfolding against an industry already struggling to meet demand.

Ontario recorded 86,760 housing starts and additional housing-related units in 2025, well short of its target of 150,000 homes. Meanwhile, new high-rise sales in the Greater Toronto Area fell to just 129 units in September, 90 per cent below the 10-year average for that month.

Canada’s broader supply challenge is equally stark. Canada Mortgage and Housing Corp. (CMHC) reports that inflation-adjusted home prices have more than doubled since 2005, while population growth has outpaced the addition of new housing.

The answer cannot be to make construction progressively more expensive and hope the market will somehow deliver more homes.

Housing affordability depends not only on interest rates and land-use policy but also on the cost and availability of the materials, energy and equipment needed to build new homes. Trade uncertainty, fuel volatility and domestic steel supply disruptions deserve urgent attention.

When the cost of building rises at every turn, projects no longer make financial sense, construction slows and consumers pay more for what gets built.

We cannot afford to make a difficult problem even harder. The price will ultimately be measured not just in dollars per tonne of steel or litres of diesel, but in homes families can no longer afford to buy.