TORONTO (Reuters) - Canada Mortgage and Housing Corp raised its forecast for 2011 housing starts on Thursday, citing an improving economy and job market.
Housing starts are expected to total 177,600 units this year, before rising to 183,800 in 2012, the federal housing agency said in its first-quarter housing outlook.
In its previous forecast, CMHC had said it expected 174,800 starts in 2011.
“Modest economic growth will continue to push employment levels higher this year and next. This, in conjunction with relatively low mortgage rates, will continue to support demand for new homes,” said Bob Dugan, chief economist for CMHC.
“Housing starts will remain in line with long-term demographic fundamentals over the course of 2011 and 2012.”
New home construction, once one of the main engines of Canada’s economic recovery, has become sluggish in recent months, although sales of existing homes remain buoyant in some areas of the country, according to the latest data.
CMHC predicted market conditions will be balanced, or would see a seller’s market, for existing home sales over the next two years.
It sees existing home sales of 441,500 units this year, then rising to 462,900 units in 2012.
The forecast was slightly more bullish than one provided by the Canadian Real Estate Association (CREA) last week. CREA lifted its forecast for national sales activity, saying it would reach 439,900 units in 2011, although this would still be a year-on-year decline of 1.6 percent.
CREA said national sales activity would rebound by 3 percent to 453,300 units in 2012, which it said is roughly on par with the 10-year average.
Reporting by Ka Yan Ng