The Canada Mortgage and Housing Corporation predicts lower demand will lead to a slowing in housing starts this year compared with 2012, with average prices to be little changed.

In its first-quarter forecast released Friday, the national housing agency’s mid-point prediction for starts is 190,300, which would be down 11 per cent from 2012’s 214,827.

The CMHC expects a pickup in starts to about 194,100 in 2014, as employment and economic growth gain momentum later in 2013 and 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."

The Crown corporation projects a mid-point number for the likely range for the average national home price to be one per cent higher in 2013 at 367,500 in 2013 and up by 2.7 per cent to $377,300 in 2014.

It foresees the mid-point number for the range of existing-home sales will be 451,100, down .05 per cent from 453,372 in 2012 and an increase of 4.7 per cent to 472,300 in 2014.