Housing starts last year hit their second-highest level since 1998, Canada Mortgage and Housing Corp. said today.

Starts for 2005 were estimated at 223,900 units, a decrease of 4.1%, compared to 2004, said Bob Dugan, chief economist at CMHC’s market analysis centre.

He said 2005 was an “excellent” year for the housing market thanks to low mortgage rates, healthy labour markets and steady income growth.

Looking ahead, starts are expected to ease again in 2006.

“Starts will continue to ease to 207,200 units this year due to a slight rise in mortgage rates and more balanced conditions in the existing home market,” Dugan said. “Still, 2006 will be the fifth consecutive year in which housing starts exceed the 200,000 unit threshold.”

On a monthly basis, the seasonally adjusted annual rate of housing starts for December was 227,700 units, up slightly from 225,000 units in November.

Statistics Canada reported Tuesday that growth in housing prices cooled slightly between October and November.

The federal agency said its new housing price index rose 0.5% in November, down slightly from October’s increase of 0.7%. On a 12-month basis, prices for November were up 5.5% compared to October’s one-year increase of 5.4%.

Statistics Canada said that of the 21 metropolitan areas surveyed, 12 posted monthly gains. Calgary led the way for the third consecutive month with an increase of 3.5 pe cent.

Price increases were mainly due to higher material costs, including drywall, flooring, lumber, and rising labour costs, Statistics Canada said, adding that higher lot values were also a factor.

Separately, the government agency said the value of building permits issued by municipalities in November fell below the $5 mark for the first time since July as both the housing and non-residential sectors posted declines. Building contractors took out $4.9 billion in permits, down 5.7% from October.