WRAPUP 1-Canada housing starts dip, prices unexpectedly up

* New home construction falls 3.1 pct

* Average price of new homes unexpectedly rise 0.1 pct

* Western provinces show sharp declines in starts, prices

By Ka Yan Ng

TORONTO, Nov 10 (Reuters) - Canadian housing starts fell by a milder-than-expected 3.1 percent last month from a year earlier, while new home prices unexpectedly rose in September, according to reports released on Monday that analysts said masked a slow deterioration in the country's property market.

Canadian housing starts fell in October to a seasonally adjusted rate of 211,800 units, with declines in both single-detached and multiple units, Canada Mortgage and Housing Corp, a federal government agency.

September starts were upwardly revised to 218,600 units from the previously reported 217,600 units. The October data easily beat analysts' median forecast of 200,000.

Separately, Statistics Canada said the average price of new homes in Canada unexpectedly rose 0.1 percent in September from August, while the year-on-year price increase slowed to 2.1 percent, a decline from 2.3 percent in August.

A Reuters survey of analysts had forecast a month-on-month decline of 0.1 percent. [ID:nN10406737]

Canada's housing sector, which until recently has shown resilience compared with the United Sates, is likely to weaken steadily over the next year as credit conditions tighten and the global economy slows, economists say.

"The risks to this area of domestic spending are largely on the downside in the face of either a worsening in the financial market turmoil or from a knock-on effect of a more pronounced weakening in the U.S. economy," said Paul Ferley, assistant chief economist at Royal Bank of Canada.

So far this year Canadian housing starts have averaged 220,700 units, down 4.7 percent from the same period last year. Ferley said this was in "stark" contrast to the United States where starts are down 29.8 percent compared with year ago levels on a nine-month basis. The U.S. October figures will be released next week.

In line with economic conditions, Canadian starts are beginning to soften. October figures show Canadian urban single home starts declined 1.1 percent to 69,300, while urban multiple starts fell 6 percent to an annual rate of 115,300 units.

Quebec and Atlantic Canada had a moderate increase in activity while overall new home construction in Ontario and all provinces west of it reported declines. British Columbia had the most notable decline where starts fell 17.5 percent to 27,900 units in October.

"This came as little surprise as a softening in existing home prices in that province have been signaling considerable weakness ahead," said Dina Cover, TD Bank economist.

Prices rose from August levels in seven metropolitan areas, were unchanged in seven others and fell in seven more.