Housing starts in 2007 are estimated at 229,600, surpassing 2006 starts, and reaching their second highest level in nearly two decades.

But the seasonally adjusted annual rate of housing starts in December decreased to 187,500 units from November’s 233,300 units, according to Canada Mortgage and Housing Corporation (CMHC).

“Growth in 2007 housing starts was driven by low mortgage rates, solid employment, income growth and a high level of consumer confidence,” says Bob Dugan, chief economist at CMHC’s Market Analysis Centre. “Even with the weakness in residential construction in December, new home starts are estimated at 229,600 units in 2007, surpassing 2006 levels.”

After two strong months in October and November, the volatile multiples segment and single-detached starts fell in December mainly due to harsh winter weather.

Also, the seasonally adjusted annual rate of urban starts decreased 23.2% to 151,600 units in December, compared to November. Urban singles were down 12.6% to 85,600 units in December, while multiple starts decreased 33.7% to 66,000 units.

Rural starts were estimated at a seasonally adjusted annual rate of 35,900 units in December.

For the year 2007, actual starts, in rural and urban areas combined, increased by an estimated 1.0% compared to 2006. In urban areas, actual total starts in 2007 decreased by an estimated 0.6%. Actual urban single starts for 2007 were down 3.5% compared to 2006, while multiple starts grew an estimated 2.1% in 2007 compared to 2006.

Housing starts are expected to remain strong in 2008, but are forecast to decrease to 214,300 units.