Housing starts to dip in 2008 following a rise in 2007

Housing starts will reach 227,530 units in 2007, an increase of 0.1 per cent from the 227,395 units in 2006, according to Canada Mortgage and Housing Corporation’s (CMHC) fourth quarter Housing Market Outlook, Canada Edition report. However, in 2008, residential construction will decline to about 214,000 units. Despite this drop, 2008 will mark the seventh consecutive year in which housing starts exceed 200,000 units.
“Continuing high employment levels, income gains and low mortgage rates have been a boon to Canada’s housing markets. Despite this, however, housing starts are expected to decrease in 2008,” said Bob Dugan, Chief Economist at CMHC. “The pull back in housing starts next year will be mainly due to the increases in house prices in recent years, which have pushed mortgage carrying costs higher.”
Existing home sales, as measured by the Multiple Listing Service (MLS®), are poised to experience their best year on record with just over 521,000 units in 2007, a 7.8 per-cent increase over 2006. The high level of MLS® sales will be led by activity in the Prairies. With respect to 2008, the level of MLS® sales will fall by 3.9 per cent, but will still be slightly over 500,000 units, the second highest on record. Growth in the average MLS® price will remain high at 10.1 per cent in 2007, mainly because of continued strong price pressures in Canada’s western provinces. As most resale markets move toward more balanced conditions, growth in average MLS®
price is forecast to slow to 4.2 per cent in 2008.

Posted  by Joe Samson

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