Housing Starts, Home Sales and Prices Will Decline This Year

Canada's home-building industry will slow by 7 1/2 per cent this year and a further 6 1/2 per cent in 2007, Canada Mortgage and Housing Corp. predicted Tuesday.

And house price increases, after hitting 10 per cent in 2005 - the biggest surge in 16 years - are forecast to moderate to 5.5 per cent this year and 3.8 per cent in 2007.

The federal home-loan-insurance Crown corporation said housing starts this year are expected to total 208,700 units, down from 225,481 in 2005. Starts in 2007 are forecast to decline to 194,800, ending five consecutive years above 200,000.

"The housing market will continue to moderate both this year and next as demand for home ownership eases toward more sustainable levels," said Bob Dugan, chief economist at CMHC.