CMHC says housing starts will be lower this year and will pick up next year

OTTAWA – Canada Mortgage and Housing Corp. says total annual housing starts are expected to be lower in 2013 compared with last year.

CMHC says moderate economic and employment growth in the second half of 2012 have led to more modest housing demand this year.

It says employment and economic growth will likely gain momentum later this year and in 2014, pushing housing starts slightly higher next year.

On an annual basis, the number of housing starts is expected to range between 178,600 and 202,000 units in 2013, with a point forecast of 190,300 units.

That compares with a level of 214,827 units in 2012 and is consistent with CMHC’s previous 2013 guidance of between 177,300 and 209,900 units, with a point forecast of 193,600 units.

In 2014, CMHC forecasts there will between 171,200 and 217,000 units of housing started, with a point forecast of 194,100 units.

Sales of existing homes are expected to range between 418,200 and 484,000 units in 2013, with a point forecast of 451,100 units, following a level of 453,372 in 2012.

In 2014, sales of previously owned homes through the Multiple Listing Service are expected to range from 439,600 to 505,000 units, with an increase in the point forecast to 472,300 units.

The average MLS price is forecast to be between $356,500 and $378,500 in 2013 and between $363,800 and $390,800 in 2014.

CMHC’s point forecast for the average MLS price calls for a one per cent gain to $367,500 in 2013 and a further 2.7 per cent gain to $377,300 in 2014.

“CMHC expects housing construction activity will trend lower in the first half of 2013, before gaining more momentum by the end of the year as economic and employment growth remain supportive of the Canadian housing market,” said Mathieu Laberge, deputy chief economist for CMHC.

“In 2014, improving economic conditions may be partially offset by a slight moderation in the number of first-time homebuyers, and potential small and steady increases in mortgage interest rates,” Laberge said in a statement.

However, the Teranet-National Bank index of Canadian housing prices in January continued to show the effects of a cooling trend that has hovered over the real estate market for more than a year.

The index was at 153 last month, up just 2.7 per cent from January 2012 _ the lowest 12-month growth rate since November 2009.