New home construction in Calgary in March, 2010. After bottoming in 2009, new home construction is expected to increase in 2010. (CBC)

After bottoming during the recession, Canada's housing market rebounded through late 2009 and early 2010 but will stabilize over the next two years, the Canada Mortgage and Housing Corporation said Wednesday.

"Canadian housing markets have recovered from the low levels posted in early 2009," CMHC chief economist Bob Dugan said.

The moderation will be felt in new housing construction. Following a total of 149,081 units in 2009, housing starts are expected to be in the range of 166,900 to 199,600 units in 2010. The next year, the CMHC predicts housing starts will be in the range of 148,600 to 208,800 units.

"Moving forward, housing starts will moderate as activity becomes more in-line with long-term demographic fundamentals," Dugan said.

The existing home market will also stabilize, the agency predicts, as sales decline and inventories increase. Low mortgage rates and pent up demand combined to make real estate red hot for much of the past year, but the agency expects that pace to ease over the next two years.

Existing home sales will be in the range of 484,000 to 513,300 units in 2010, then move slightly lower in 2011 to be in the range of 443,500 to 504,900 units, the CMHC predicted Wednesday.

As for prices, the agency is calling for stability through 2010, followed by a modest rise in 2011.

The average price of a home in Canada hit $341,893 during the first quarter of 2010. The CMHC expects the average price to hover around $345,500 for 2010 before rising to $350,800 in 2011.