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Housing starts to slow this year, CMHC says

Canada Mortgage and Housing Corp. says it expect a national slowdown in housing starts over the course of this year and next, but cautioned there will be big variations from province to province due to economic factors.
Canada Mortgage and Housing Corp. says it expects housing starts across the country to range from 181,300 units to 192,300 units this year, followed by a decline in 2017. (CBC)

Canada Mortgage and Housing Corp. says it expect a national slowdown in housing starts over the course of this year and next, but cautioned there will be big variations from province to province due to economic factors.

CMHC said housing starts for 2016 are expected to range from 181,300 units to 192,300 units, and then ease to between 172,600 units to 183,000 units in 2017. The federal housing agency said those figures represents a slight upward revision from its previous outlook, but a slowdown compared to 2015.

"Increased housing starts in Ontario and B.C. will be more than offset by decreases in provinces that are affected by the drop in oil prices in 2016," said  Bob Dugan, Chief Economist, Canada Mortgage and Housing Corporation

On the resale market, CMHC said there were 505,673 sales reported through the private-sector Multiple Listing Service in 2015, with an average price of $442,999.

For this year, sales of existing homes are expected to range from 501,700 units to 525,400 units in 2016, but then ease to a lower range of 485,500 units to 508,400 units in 2017. 

CMHC said the average MLS price is forecast to be between $474,200 and $495,800 in 2016 and between $479,300 and $501,100 in 2017.

The agency said the chief risk to its outlook is the future direction of oil prices.

"The full impact of the decline in crude oil prices on the Canadian economy remains unclear and depends on the extent and timing of the recovery in oil prices," CMHC said, noting that the oil-produced economies of Alberta, Saskatchewan, and Newfoundland and Labrador have all been affected by the sharp drop in the price of crude.

CMHC also said that overvaluations detected in nine major markets, and elevated levels of household debt remain two other factors that could affect its outlook.

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