Housing starts in Canada are expected to slip slightly this year and in 2007, the Canada Mortgage and Housing Corp. said today.

Starts will reach 222,200 units this year after hitting 225,481 units in 2005, according to CMHC’s second quarter market outlook. Residential construction will continue to ease in 2007 to 204,100 units, marking six consecutive years in which housing starts exceed 200,000 units.

“Housing starts this year will be stronger than previously forecast, mainly due to persistent strong demand in Alberta and British Columbia, but will not match last year’s pace,” said Bob Dugan, chief economist at CMHC, in a release.

“Higher mortgage carrying costs, due to modest increases in mortgage rates, and rising house prices will temper housing demand this year and next,” he added.

Sales of existing homes, as measured by the Multiple Listing Service, are forecast to have their second best year on record with 478,400 units in 2006, a slight decline of 0.9% compared to 2005.

CMHC said rising new listings will give home buyers more choice and help keep the level of MLS sales well above the 450,000 mark for each of the next two years.

“However, four consecutive years of strong price growth combined with rising mortgage rates will ease housing demand in many centres across Canada,” CMHC said. Sales are expected to drop in all regions except in the prairies.

Prices will continue to advance this year due entirely to acceleration in the Alberta and B.C. markets. Growth in the average MLS price will increase from 10.2% in 2005 to 11.2% in 2006. Aside from B.C. and Alberta, growth in house prices is expected to slow in the rest of the country.