Housing starts have started to recover and are expected to continue to improve in the second half of 2009, Canada Mortgage and Housing Corp. said Monday.

Starts are expected to reach 141,900 for the year and will increase to 164,900 for 2010, according to CMHC’s fourth quarter Housing Market Outlook.

“We expect housing markets across Canada to strengthen leading into and over the course of 2010 as economic conditions improve”, says Bob Dugan, chief economist for CMHC.

“Demand for existing homes has rebounded since the beginning of the year. In addition, lower inventory levels characterize both the new and existing home markets. As a result, stronger housing demand will be reflected in higher levels of housing starts in 2010.”

CMHC says the strong pace of MLS sales seen in the second and third quarters of this year reflects, in part, activity that was delayed in the previous two quarters and is not likely to be sustained.

The level of sales is expected to move back closer in line with anticipated economic conditions. As a result, existing home sales, as measured by MLS, will reach 441,300 units in 2009 and increase to 445,150 units in 2010.

The average MLS price is expected to be $312,950 in 2009 and $324,500 in 2010.