According to the first quarter Housing Market Outlook, Canada Edition, which is issued by the Canada Mortgage and Housing Corporation (CMHC), demographic fundamentals will be critical to new home construction starts in 2011 and 2012. The CMHC believes that new home starts will stabilize after lower numbers in the second half of 2010.

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The predictions call for new home starts to be at a level of 177,600 units in 2011, or at least within a range of 157,300 to 192,900 units. According to the point forecast, 2012 will see 183,800 new units, or a number ranging from 154,600 to 211,200 units. Bob Dugan, CMHC's Chief Economist said: “Modest economic growth will continue to push employment levels higher this year and next. This, in conjunction with relatively low mortgage rates, will continue to support demand for new homes. Housing starts will remain in line with long term demographic fundamentals over the course of 2011 and 2012."

The outlook also mentions existing home sales which are expected to be in a range of 398,500 to 485,500 units in 2011, with a point forecast of 441,500 units. Sales are going to increase in 2012, CMHC says, totaling at a level ranging from 406,300 to 519,700 units, with a point forecast of 462,900 units. Sellers are likely to dominate the overall housing market in 2011 and 2012, which will result in a modest rise in prices that will be in line with economy-wide inflation. In general, the CMHC predicts a stable housing market.