Canada Mortgage and Housing Corp. has tempered its rosy outlook for Red Deer’s residential construction sector, but continues to forecast an increase in housing starts both this year and next.

The national housing agency is now projecting that there will be 605 housing starts in the city this year: 330 single-detached homes and 275 units in multi-family projects.

For 2014, it’s anticipating 630 starts: 340 single-detached and 290 multi-family units.

Those numbers are down sharply from CMHC’s previous housing market forecast, which was issued in early November.

At that time, the agency was calling for 680 housing starts in 2013 (380 single-detached and 300 multi-family units).

In the analysis accompanying its most recent housing market outlook, CMHC said it expects economic activity in Alberta to generate employment growth of less than two per cent in 2013 and 2014.

It added that a rapid increase in the pace of multi-family construction in the province has added to supply, which should slow the introduction of new projects.

Among Alberta’s largest urban centres, Medicine Hat is projected to see the highest percentage increase in housing starts from 2012 to 2013, at 7.4 per cent.

Red Deer is expected to be next at 6.5 per cent, followed by Grande Prairie at 4.7 per cent. The anticipated year-over-year change in Edmonton is expected to be a 11.2 per cent drop, with Calgary anticipated to decline by 8.1 per cent, the Regional Municipality of Wood Buffalo by 7.4 per cent and Lethbridge by 2.3 per cent.

In the case of Central Alberta’s resale market, CMHC has boosted its prediction of sales activity in 2013.

It’s now calling for 4,500 Multiple Listing Service sales in 2013 — up from the 4,300 it was forecasting less than four months ago. Its outlook for 2014 is 4,700 sales.

As for average prices, CMHC is anticipating the 2013 figure will be $286,500. That’s unchanged from its previous outlook. For 2014, CMHC is now calling for an average price of $294,500.

It said growth in full-time jobs, rising wages, and in-migration into Alberta has helped transition most resale markets in the province out of buyers’ conditions.

The biggest increase in MLS sales from 2012 to 2013 is expected to occur in Grande Prairie, with a jump of seven per cent. The Red Deer region is expected to be next, at 4.6 per cent, followed by Edmonton at 3.2 per cent, Medicine Hat and the Regional Municipality of Wood Buffalo at 1.9 per cent each, Calgary at 1.4 per cent and Lethbridge at 1.2 per cent.