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CMHC cuts 2014 housing starts forecast, signalling slowing market

Andrea Hopkins, Reuters  via Financial Post

TORONTO — Canada’s federal housing agency has bumped up its forecast for housing starts in 2013 but trimmed its forecast for 2014, setting an essentially flat outlook for a once-roaring market.

The Canada Mortgage and Housing Corp said on Thursday housing starts will be in a range of 179,300 to 190,600 units in 2013, with a point forecast, or most likely outcome, of 185,000. That is up from its August estimate of 182,800.

The agency said there will be 163,700 to 205,700 units started in 2014, with a point forecast of 184,700. That is down from CMHC’s August estimate of 186,600.

Both forecasts represent a sharp slowdown from the 214,827 starts of 2012.

Canada sidestepped the worst of the financial crisis of the last decade because it avoided the real estate excesses of its U.S. neighbour, and a post-recession housing boom helped it recover more quickly than its Group of Seven peers.

But the housing market began to cool last year after the country’s Conservative government, worried about a potential property bubble, tightened mortgage rules.

While some economists still worry that the U.S. housing crash of the last decade may be repeated in Canada, the CMHC forecasts see homebuilding and sales leveling off, with prices continuing to notch small gains.

CMHC said existing home sales will range from 439,400 to 474,000 in 2013, with a point forecast of 456,700 units. That’s up slightly from August’s forecast of 448,900 units and about equal with the 454,005 sales in 2012. For 2014, it expects a move up to a range of 438,300 to 498,100, with an increase in the point forecast to 468,200. That’s up slightly from August’s forecast of 467,600.

Price gains are expected to slow in 2013 and 2014. CMHC’s point forecast for the average price calls for a 4.0% gain to $378,000 in 2013, and a 1.9% gain to $385,200 in 2014.

© Thomson Reuters 2013

Source: Financial Post

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