Low mortgage rates, healthy labor markets and steady income growth helped Canadian housing starts to reach their second highest annual level since 1988.

"2005 was another excellent year for residential construction," said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. "Total housing starts for 2005 were estimated at 223,900 units, a decrease of 4.1 per cent, compared to 2004."

Dugan says 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. Still, he predicts that 2006 will be the fifth consecutive year in which housing starts exceed the 200,000 unit threshold.

Lower multiple starts were behind the decline in the seasonally adjusted annual rate of total urban starts in three out of five regions across Canada. Urban housing starts eased in the Atlantic (-8.8 per cent), the Prairies (-7.0 per cent), and Quebec (-0.5 per cent). Urban housing starts were up 4.4 per cent in Ontario and 10.8 per cent in British Columbia during the last month of the year.

The decline in actual urban starts in 2005 - 5.4 per cent more than offset the increase in rural starts. Actual total starts decreased 4.1 per cent compared with 2004.

Meanwhile, Statistics Canada reports that the value of building permits issued by Canadian municipalities in November fell below $5 billion for the first time since July, with declines in both the housing and non-residential sectors posted. Contractors took out permits for $4.9 billion worth of construction, down 5.7 per cent from October.

"Even so, building intentions appear poised to set a second consecutive annual record," Statistics Canada reported. "On a cumulative basis, construction intentions for the first 11 months of 2005 were just $166 million short of the annual total for 2004, which was an all-time high." The overall value of permits issued between January and November 2005 grew 9.6 per cent over the same period of 2004, totalling $55.4 billion. (CREA 11/01/2005)