Housing starts on an annual basis slipped to 240,900 in February from 248,100 in January, Canada Mortgage and Housing Corp. said today. CMHC is forecasting more moderation this year as prices and interest rates rise.

“Despite the modest decline, the rate of housing starts in February continued to be very strong.” said Bob Dugan, chief economist at the federal housing agency’s market analysis centre. “However, we expect activity to moderate over the course of 2006, as higher mortgage carrying costs due to rising house prices and modest mortgage rate increases contribute to a softening of demand for both existing and new housing.”

The seasonally adjusted annual rate of urban starts fell 3.3% to 208,300 units last month, with decreases in both single and multiple starts. Multiple starts eased by 2.0% to 101,400 units and single starts fell back 4.6% to 106,900 units.

The agency said a vibrant economy in western Canada pushed starts higher in both British Columbia and the Prairies.

Urban starts on the Prairies rose 11.5% to 45,400 units while in British Columbia they surged 22.6% to 39,100 units.

In the rest of the country, urban starts were down, with the sharpest declines in the Atlantic region (down 16.8% to 10,900) and Ontario (off 15.1% to 73,700 units).

In Quebec, starts fell 8.8% to 39,200 units.

Rural starts in February were estimated at a seasonally adjusted annual rate of 32,600 units.

For the first two months of the year, actual urban starts were 17.7% higher than in the same period in 2005. Single starts increased 21.9% and multiple starts rose 14% compared to the same period last year.