Canadian housing growth seen slowing in 2008

TORONTO, Oct 30 (Reuters) - Canadian housing starts are expected to dip in 2008 as homes become less affordable, but residential construction will remain a cornerstone of the Canadian economy, the national housing agency said on Tuesday.

"Continuing high employment levels, income gains and low mortgage rates have been a boon to Canada's housing markets," said Bob Dugan, chief economist at the Canadian Mortgage and Housing Corp said in a release.

"Despite this, however, housing starts are expected to decrease in 2008." he stated in the CMHC's fourth-quarter housing market outlook, Canada edition report.

That's mainly due to higher house prices, which have pushed up mortgage carrying costs, he said.

Even so, this is expected to mark the seventh consecutive year in which housing starts exceed 200,000 units.

Housing starts are seen slipping to around 214,000 units in 2008, from an expected 227,530 units in 2007. In 2006, 227,395 units were built, according to the CMHC.

EXISTING HOME SALES OUTLOOK

Existing home sales, as measured by the Multiple Listing Service (MLS), are expected to drop by 3.9 percent, to just over 500,000 units. That will still be the second-highest level on record, following 2007's anticipated total of just over 521,000 units. MLS is a real estate property service.

Average MLS prices are expected to grow at 10.1 percent in 2007, mainly because of strong price pressures in Canada's western provinces. Average MLS prices are seen slowing to 4.2 percent in 2008.