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CMHC revises down home price forecast over next two years to adjust for interest rate spike

Although home prices have plummeted since the central bank started raising interest rates in March, CMHC chief economist Bob Dugan said he was ‘leery’ of forecasting a steeper price decline when the housing shortage is so severe.CARLOS OSORIO/Reuters

Canada’s housing agency has cut its national home price forecast for this year and next, saying that interest rates were rising faster than it anticipated – but the agency is not predicting a sharp correction because it said a housing shortage will support prices.

Canada Mortgage and Housing Corp., which was criticized in 2020 for sticking to a pessimistic outlook for housing prices early in the pandemic, is revising its forecast because the Bank of Canada will likely continue to hike its benchmark interest rate aggressively to slow runaway inflation, which makes it harder for residents to afford a mortgage.

The federal agency revised…

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