Take your seats for a really big slooow

Seasonally adjusted, the annualized rate of housing starts was 204,107 units last month, down from 223,995 in September.

The dropoff is larger than many analysts were predicting, even as they factored in the new mortgage rules and federal lending guidelines that have blocked thousands of first-time and other buyers.

The report follows on the heels of the release of CMHC's quarterly market forcast.

“A weaker outlook … will bring moderation in housing starts next year,” said Mathieu Laberge, a CMHC economist. “Nevertheless, employment growth and net migration will help support housing starts activity going forward.”

Canada’s new home market is expected to continue to moderate in the last quarter of 2012 and into 2013, writes the Crown corporation in its 2012 fourth quarter report. In the meantime, activity in the existing home market is expected to hold steady, leading to house price growth in line with or slightly below inflation.”

Those factors have collectively contributed to the CMHC’s forecast for vacancy rates, projected to hold steady at 2.2 per cent in 2012 before declining to 2.0 per cent in 2013. The drop – higher in Toronto and other key urban centres – reflects slowing rental construction and strong rental demand due to high migration.

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