Prime Minister Mark Carney’s pledge to double housing construction to 500,000 units per year is not only an ambitious housing target—it’s also the centerpiece of a broader industrial strategy designed to reshape Canada’s building and forestry sectors.

At the heart of the plan is the newly launched Build Canada Homes (BCH) agency, backed by $26 billion in federal funding and set to begin operations this fall. The agency’s mission is to accelerate the adoption of factory-built housing—including prefabricated, modular, panelized, and mass timber construction—across the country.

According to federal estimates, these innovative housing types can be built up to 50% faster and 20% cheaper than traditional methods. However, Canada’s factory-built housing sector has struggled to gain momentum due to inconsistent demand, limited financing, and industry skepticism.

Carney’s strategy also seeks to breathe new life into Canada’s forest products industry, which has been weakened by years of high U.S. tariffs—currently set to rise from 14.4% to 35%. To address this, the federal government unveiled a $1.2 billion package to promote the use of Canadian wood in the BCH initiative. The package includes research and development funding to create innovative materials, such as mass timber structures and wood fibre insulation, that can lower housing costs and improve energy efficiency.

“We will create an entirely new Canadian housing industry,” Carney said, emphasizing that the initiative would stimulate economic growth, create skilled jobs, and restore housing affordability within a decade.

The BCH program’s scale is unprecedented, with potential to produce 2.5 million homes nationwide and make housing more accessible to Canadians from coast to coast. But achieving this will require collaboration among all levels of government, thousands of municipalities, private builders, and financial institutions that remain hesitant to support unfamiliar housing models.

While factory-built homes are common in countries like Sweden and Japan, they currently make up less than 5% of residential construction in Canada. To expand the sector, BCH will invest in training programs to build a skilled workforce capable of operating advanced tools and machinery used in off-site construction of walls, floors, and modular units.

A recent C.D. Howe Institute report underscored the promise of modular and mass timber housing, highlighting successful Canadian projects such as Toronto’s 216 modular homes, the Tallwood House at the University of British Columbia, and modular student residences at Selkirk College and Trinity Western University in British Columbia.

If successful, Carney’s initiative could mark a turning point in both Canada’s housing crisis and industrial modernization, establishing a resilient homegrown supply chain for affordable, sustainable, and efficient housing.