Canada’s housing market will recover from recent downturns over the next two years, according to the 2020 Housing Market Outlook released by Canada Mortgage and Housing Corporation (CMHC) on Thursday.

Housing starts are expected to register a second consecutive annual decline this year before stabilizing in 2020 and 2021. Starts for single-detached and multi-unit housing types will remain below the peaks observed in 2017 (for single-detached starts) and 2018 (for multi-unit starts).

Existing home sales are projected to stay near their 2018 levels until the end of 2019 and then increase in 2020 and 2021, offsetting the declines observed since 2016 and reflecting household disposable income growth.

The average MLS price is expected to decline for a second consecutive year from the recent high registered in 2017. Positive price growth is expected to resume in the next two years, driving the average price above its 2017 level by the end of the forecast horizon. Household disposable income growth and household-formation rates will support price growth.

"Housing starts are projected to stabilize in 2020 and 2021 at levels in line with long-run averages," said Bob Dugan, CMHC's chief economist. "This follows two years of declines from elevated levels in 2017. Resale activity and house prices are expected to fully recover from recent declines."

In terms of risks to the outlook, CMHC continues to see vulnerabilities related to international trade tensions and high household indebtedness that present risks to economic activity and housing-market stability.

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