According to CMHC’s second quarter 2015 Housing Market Outlook, Canada Edition¹, housing markets will remain stable with housing starts moderating slightly in 2015 and 2016. There are, however, a number of risks and vulnerabilities that can affect the market outlook for Canada and each province. To account for these risks and vulnerabilities, CMHC produces forecast ranges for resale and new home markets.

“Lower oil prices are contributing to disparities between provincial housing markets. A slowdown in housing starts and resale transactions in oil-producing provinces such as Alberta will be partly offset by increased housing market activity in other provinces, such as Ontario and British Columbia, which benefit from the positive impacts of declining energy prices, a lower Canadian dollar and continued low mortgage rates,” said Bob Dugan, Chief Economist for CMHC.

“Moreover, since the inventory of completed and unabsorbed units remains above the historical average, we expect the pace of new home construction to moderate over the next couple of years as builders focus on managing the existing inventory,” added Mr. Dugan.

On an annual basis, housing starts are expected to range between 166,540 and 188,580 units in 2015, with a point forecast of 181,618 units. For 2016, housing starts are forecast to range from 162,840 units to 190,830 units, with a point forecast of 181,800 units.

MLS^®2 sales are expected to range between 437,100 and 494,500 units in 2015, with a point forecast of 475,400 units. In 2016, MLS^® sales are forecast to range from 424,500 units to 491,300 units, with a point forecast of 469,000 units.

The average MLS^® price is forecast to be between $402,139 and $439,589 in 2015, with a point forecast of $422,129. For 2016, the average MLS^® price is forecast to be between $398,191 and $457,200, with a point forecast of $428,325. The gradual slowdown in the rate of price growth is explained by the expected change in the composition of MLS^® sales toward more moderately priced homes. Due to the recent decline in oil prices, our assessment is that there is more downside risk than upside risk to our forecast.