Canada housing market may start recovery from virus impact by mid-2021: CMHC

FILE PHOTO: An apartment building is lit by the dawn sun in Toronto, Ontario, Canada April 23, 2020. REUTERS/Chris Helgren

OTTAWA (Reuters) - Canadian housing starts, sales and prices are expected to start to recover by mid-2021 as the coronavirus pandemic recedes, but the precise timing and duration of that rebound is highly uncertain, Canada’s national housing agency said on Wednesday.

Until then, the same measures -- housing starts, sales and prices -- are expected to plunge, according to a special edition of Canada Mortgage and Housing Corporation’s (CMHC) Housing Market Outlook report.

Housing starts will likely see a decline of 51% to 75% in 2020 from pre-COVID-19 levels, before starting to recover by the second half of 2021, CMHC said.

Existing home sales are also expected to slump this year, falling 19% to 29%, with recovery expected to start late in 2020. Average home prices are forecast to drop by 9% to 18% in 2020, with recovery anticipated to begin in the first half of 2021.

Sales and prices are likely to remain below their pre-COVID-19 levels through 2022, the agency added.

“Canada’s housing markets could start to rebound by the end of the first half of 2021, once the unprecedented medical emergency abates sufficiently to allow containment measures to be relaxed and consumer and business confidence to recover,” the report reads.

“The precise timing and speed of the recovery is highly uncertain because the virus’ future path is not yet known,” CMHC Chief Economist Bob Dugan told reporters.

Officials shuttered most non-essential businesses across Canada in mid-March and urged people to stay at home to slow the spread of the coronavirus. This reduced residential construction in certain regions, but in recent weeks provinces have started to reopen slowly.

Reporting by Kelsey Johnson in Ottawa; Editing by Cynthia Osterman