TORONTO (Reuters) - Canadian housing starts will moderate in 2008 and then slide further in 2009, as demand sags and the costs of carrying a mortgage rise, the Canada Mortgage and Housing Corporation said on Friday.
The agency forecast housing starts of 215,475 units in 2008, down from 228,343 in 2007. And the 2009 figure would be even lower -- it forecast 194,000 starts.
CMHC also said it expected an 11.9 percent drop in existing home sales to 459,300 units in 2008, with a further drop to 446,900 units in 2009. But it expected housing prices on the realtors’ multiple listing service to rise around 3 percent in both in 2008 and 2009, outpacing likely inflation rates.
“Increased competition from the existing home market, coupled with the elimination of the pent-up demand that built up during the 1990s, will exert downward pressure on housing starts,” CMHC chief economist Bob Dugan said in a statement.
But new home construction still remains high by historical standards, the agency said.