Canadian housing starts slowed by about 21 per cent in February, failing to keep up a pace set in a mild January.

The figure — reported Thursday by the Canada Mortgage and Housing Corp. — may be a blip in an otherwise strong Canadian housing market, exempt so far from some of the credit headaches plaguing the U.S. market.

A separate report by Statistics Canada on Thursday showed prices of new homes rising moderately across most of the country between December and January, maintaining year-over-year increases of more than 10 per cent.

The biggest jumps were were in Edmonton and Calgary, where the 12-month gains exceeded 40 per cent.

The CMHC report shows builders beginning work on houses and apartments in February at a rate that would yield about 196,200 units a year, down from 248,500 in January. The figures are statistically adjusted to remove normal seasonal variations.

Even so, the federal agency expects the year to turn out better than its report suggests.

"Following the unusually strong surge in construction activity in January, which was partly attributable to the unseasonably warm weather, housing starts in February returned to levels more in line with expectations," CMHC economist Bob Dugan said in a statement.

"Housing starts are likely to increase in the coming months and are forecasted to reach 209,500 units in 2007."

BMO Capital Markets economist Bart Melek said the 21-per-cent drop was much larger than expected but was not cause for alarm in a chilly Feburary after a January thaw.

In a commentary on Thursday, Melek called it "a giving-back of borrowed activity" that "does not point to a deepening downward trend."

In the CMHC report, multiple-family projects in urban areas showed some of the sharpest declines in February, down 33 per cent from January on a seasonally adjusted basis There were declines in all regions except in the Atlantic, which showed a 15.6-per-cent increase.

Urban single-family home starts fell 12.6 per cent amid slowdowns everywhere but British Columbia, where the rate was unchanged from January.

The Statistics Canada report on contractors' selling prices showed a January-to-January national increase of 10.1 per cent, down from a December-to-December figure of 10.7 per cent.

The national increase from December to January was 0.3 per cent.

Edmonton's prices showed a one-month gain of 1.6 per cent and a 12-month gain of 40.2 per cent. Calgary's figures were 0.8 per cent and 40.8 per cent.