New home construction in the Inspiration Community project by developers Tribute Communities in Richmond Hill Nov 10, 2010. (Moe Doiron/The Globe and Mail)Moe Doiron/The Globe and Mail
The pace of home building across the country is expected to slow in the second half of this year, resulting in fewer housing starts in 2011 than last year, Canada Mortgage and Housing Corp. reported Monday.
The federal agency is forecasting about 179,500 housing starts this year, down from 189,930 units in 2010.
The slowdown is expected to affect both singe-detach homes as well as multifamily housing, which includes row houses, semi-detached homes and apartments.
"Single starts peaked in the first quarter of 2010 but have moderated progressively since then. The number of single-detached starts is expected to reach 82,700 in 2011, down from 92,554 in 2010," CMHC said.
"Across the country, most provinces will see a decrease in the number of multi-family housing starts in 2011. The exceptions are Ontario and British Columbia which will post solid gains."
There will be about 96,800 multiple unit starts in 2011, down from 97,376 last year.
CMHC expects the slowdown in overall housing starts of both single-family and multiple-family units will be felt in all areas of Canada, although the declines in British Columbia and Ontario will be very modest.
By contrast, the sales of existing homes through the Multiple Listing Service is expected to edge higher this year to between 429,500 and 480,000 units.
The corporate expects posted mortgage rates will be "relatively flat" in 2011 before increasing moderately in 2012.
"For 2011, the one-year posted mortgage rate is assumed to be in the 3.1 to 3.5 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.1 to 5.6 per cent range," CMHC said.
"For 2012, the one-year posted mortgage rate is assumed be in the 3.4 to 4.3 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.2 to 6.3 per cent range."
Economists expect the Bank of Canada will keep its key overnight target rate at one per cent, where it has been since September, when the central bank makes its announcement on Tuesday.
There had been widespread expectations early this year that the Bank of Canada would begin to hike its rates in June or July but many observers now think it will be later than that because of a softening of economic growth.