Canada will remain well short of the housing it needs over the next decade, the Parliamentary Budget Officer warned in a report released Tuesday. The watchdog estimates the country must add 3.2 million units by 2035 to close the supply gap, yet current construction trends point to only 2.5 million completions, leaving a deficit of roughly 700,000 dwellings. The PBO projects average new-home construction of 227,000 units a year, below the roughly 290,000 required to meet demand. While a sharp slowdown in immigration—following federal target cuts in 2024—is expected to curb household formation and lift vacancy rates from a record-low 3.3 percent in 2024 toward the historical average of 6.4 percent, the report says easing demand alone will not fully resolve affordability pressures. The assessment contrasts with the Canada Mortgage and Housing Corp.’s June forecast that 5.3 million homes would be needed by 2035 to restore affordability. The PBO argues that building at that pace would push the national vacancy rate to an “abnormally high” 13 percent. Instead, it calls for stepped-up but targeted construction to close the supply gap without overbuilding.