Higher prices and rising short-term interest rates will weigh down housing starts across the country this year and next, but the slowdown should be slow and steady, Canada Mortgage and Housing Corp. says.
And while some economists warn that nosebleed prices in Alberta could fall sharply within a few months, others say the national trend is for a soft landing on prices as well.
"We're seeing a slow deceleration in housing activity but still with activity at fairly high levels, and we expect that to continue through 2007 as starts come off their very robust pace of 2005 and 2006," said Gregor Bush, an economist with the Bank of Montreal.
"That's still very high by historical standards."
In its first-quarter housing market outlook, CMHC said it expects new-home construction to ease this year to 209,500, from 227,395 units in 2006.
That would still be the sixth straight year in which starts exceed 200,000 units.
The agency further forecast that starts should drop further to 195,500 units in 2008.
"Construction activity will continue to moderate as demand for home ownership moves toward more sustainable levels," CMHC chief economist Bob Dugan said in a release.
