New home construction will moderate from historically high levels, to reach just under 178,000 units in 2009, according to Canada Mortgage and Housing Corp.

CMHC called its forecast “consistent with demographic fundamentals.”

“High employment levels, rising incomes and low mortgage rates have continued to provide a solid foundation for healthy housing markets this year,” said Bob Dugan, chief economist for CMHC.

“Housing starts will moderate to 212,200 units in 2008 and 177,975 units in 2009,” he said. That’s a 16% drop.

Existing home sales, as measured by the Multiple Listing Service, which reached a record level of 523,701 sales in 2007, will drop in 14% in 2008 to 452,225 units

In 2009, MLS sales will fall to 433,375 units.

Despite a moderation in MLS sales, demand for existing homes will remain strong by historical standards, CMCH said.

With housing markets having become balanced across Canada, the rate of growth in the average MLS price will moderate. Average prices will reach $306,500 in 2008 and $306,700 in 2009, CMHC said.