Real estate prices and sales volumes are on track to set records this year, the Canadian Real Estate Association said Monday.

It also forecasts that prices will rise more modestly in every province next year, while the number of sales is expected to fall slightly.

The association says 523,100 homes will be sold in 2007, up 8.1 per cent from last year. The average sale price is forecast at $305,900, up 10.4 per cent from 2006.

The biggest price increases this year will be in Alberta (up 24.6 per cent) and Saskatchewan (up 17.4 per cent).

For 2008, CREA forecasts that total sales will drop by two per cent to 512,705, while the average sale price across the country will rise by 5.5 per cent to $322,700.

In contrast to the double-digit increases in the West this year, the association predicts every province's average home price will rise by only single-digit amounts next year — with Manitoba and Nova Scotia topping the list with increases of 7.7 per cent and 7.5 per cent, respectively.

"The resale housing market will become more balanced as rising prices and higher mortgage interest rates gradually impact affordability," says CREA chief economist Gregory Klump in a release.

"Strong employment numbers will keep sales activity strong, even as prices and interest rates continue to rise."

       Residential housing market forecast
 Region  2007 forecast % up over '06  2008 forecast   % up over '07
 Canada  $305,900 10.4%  $322,700 5.5%
 B.C.  $429,700 9.9%  $454,200 5.7%
 Alberta  $355,600 24.6%  $379,000 6.6%
 Sask.  $155,000 17.4%  $163,600 5.5%
 Man.  $167,100 11.2%  $180,000 7.7%
 Ont.  $302,300 8.6%  $316,700 4.8%
 Que.  $207,100 6.7%  $219,700 6.1%
 N.B.  $136,300 7.4%  $142,100 4.3%
 N.S.  $184,800 9.2%  $198,600 7.5%
 P.E.I.  $132,400 5.6%  $139,200 5.1%
 N.L.  $144,000 3.2%  $149,900 4.1%
    Source: CREA