CMHC Expects Housing Markets to Moderate in 2016 and 2017

CMHC’s fourth quarter 2015 Housing Market Outlook, Canada Edition, expects housing markets to moderate in 2016 and 2017.

“In 2015, increased housing market activity in provinces like Ontario and British Columbia – provinces that have benefitted from declining energy prices, a lower Canadian dollar and continued low mortgage rates – offset slowdowns in oil-producing provinces like Alberta,” said Bob Dugan, CMHC Chief Economist. “We expect, however, that this counterbalancing effect will decrease over time. As such, housing starts and MLS® sales are projected to moderate in 2016 and 2017.”

Another key factor in the moderation of starts is inventory management of multi-unit projects which typically have longer time horizon for construction than single-detached units. CMHC expects new home construction to slow down in the coming years as high levels of completed but unsold units will encourage some builders to channel demand for new housing towards existing inventory.

House price growth is expected to slow down as MLS® sales will favour moderately priced homes.

CMHC produces forecast ranges for resale and new home markets to account for risks and vulnerabilities that can affect the outlook for Canada and each province.

For 2015, housing starts are expected to range between 162,000 and 212,000 units in 2015, with a point forecast of 186,900 units. For 2016, housing starts are forecast to range from 153,000 units to 203,000 units, with a point forecast of 178,150 units. In 2017, we expect starts to range between 149,000 and 199,000 units, with a point forecast of 173,650 units.

MLS® sales are expected to range between 444,000 and 546,000 units in 2015, with a point forecast of 494,700 units. MLS® sales are forecast to range from 425,000 units to 534,000 units in 2016 and from 416,000 units to 536,000 units in 2017, with respective point forecasts of 479,500 and 476,000 units.

The average MLS® price is forecast to be between $417,000 and $459,000 in 2015, with a point forecast of $437,700. The average MLS® price is forecast to be between $420,000 and $466,000 in 2016 and between $424,000 and $475,000 in 2017, with respective point forecasts of $443,300 and $449,600. The point forecasts call for a 7.2 per cent gain in 2015, 1.3 per cent gain in 2016 and a further 1.4 per cent gain in 2017.

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