The Canada Mortgage and Housing Corporation (CMHC) said that the housing market will pick up momentum in the later part of this year and into 2014.
David George-Cosh said in a blog for The Wall Street Journal that if this prediction sounds familiar, it's because it's similar to the outlook of an agency report in February, but with revisions downward for 2013 and 2014.
What are the current predictions?
The CMHC now forecasts starts of 182,900 units this year, down from the first quarter unit estimate of 190,300. In 2014, housing starts are expected to be at 188,900 units. The CMHC predicts resales will be at 443,400 in 2013 and 468,600 in 2014.
For 2013, the average MLS price forecast is $359,400 to $380,000, while in 2014 it will be $362,400 to $392,200, the CMHC reported. Most provinces, with the exception of Alberta and British Columbia, are expected to see lower MLS sales in 2013, but in 2014 MLS sales are predicted to increase in all regions except New Brunswick, Prince Edward Island and Newfoundland and Labrador.
In mortgage news, the CMHC said that there's no anticipation of increases in short-term and variable mortgage rates before the middle of 2014. The CMHC's best-case scenario for mortgage rates in 2013 predicts the one-year mortgage rate will fall within 3 to 3.25 percent. The five-year posted mortgage rate is expected to be 5 to 5.5 percent. In 2014, the one-year mortgage rate is forecasted to rise between 3.25 and 3.75 percent while the five-year mortgage is expected to rise to 5.25 to 5.75 percent. Even with the increases, rates are expected to remain low and anticipated to support housing demand.
This year started off slowly in terms of employment, according to the CMHC, but employment is expected to improve throughout the year, growing 1.3 percent in 2013 and 2014. That will help support the housing sector. In addition, income growth moderated from the second to fourth quarters in 2012, but growth is expected to continue and will support the housing demand.
The resale market conditions are expected to be balanced in the majority of local markets in 2013 and 2014, said the CMHC. So far in 2013, the average monthly growth rate of seasonally adjusted MLS sales, prices and new listings have been positive. The change in the resale market from 2013 will eventually be reflected in a change in the new home market trend, which typically lags one to three quarters behind the resale market.