The Canadian housing market has flattened out and will likely stay pretty close next year to where it is now in terms of new housing starts and resales, according to Canada Mortgage and Housing Corp.

The federal agency said Friday that the market has shifted to a more balanced position as listings have increased and prices are expected to remain flat to the end of 2012.

Low mortgage rates, the domestic economy and immigration remain positive factors for the real estate market.

"These factors will continue to support Canada's housing sector in 2012," said Mathieu Laberge, deputy chief economist for CMHC.

Uncertainty in the global economy and U.S. economic recovery pose threats as the CMHC said it expected new housing starts to come in around the 191,000-unit mark this year and level off next year to about 186,750 units.

The agency said existing home sales will be come in this year at between 423,600 and 470,100 units, rising only "modestly" to between 406,100 and 509,000 units next year.

The average home price in Canada for 2011 is expected to be $363,900 in 2011 and reach $368,200 in 2012.

CIBC economist Benjamin Tal said the market next year will likely be "boring" compared with the double-digit gains seen in recent years. However, that may be good for the market.

"I think the next year will be a very telling year. If we stabilize and see prices stabilizing or even falling a very little bit, that would be a very good thing actually for the future health of the market," he said.

Tal noted that if the forecast is wrong and 2012 turns out to be another strong year for home prices, his concerns about a possible crash in the housing market will only increase.

"If we talk next year and house prices are another 10 per cent up and mortgage activity has accelerated, then I will be more nervous," Tal said.

The increase in home prices in 2011 has come despite the turmoil on the financial markets and a slower than expected economic recovery in the United States.

However mortgage rates are lingering near record lows and economists are predicting that the Bank of Canada's key rate — which affects variable rate mortgages — will remain on hold until 2013.

A report last month by the Canadian Real Estate Association found that Canadian home sales were up 1.2 per cent in the first nine months of this year compared with 2010.

A strong September drove the number of homes sold on the Canadian Real Estate Association's Multiple Listing Service in the first nine months of 2011 to 361,749, compared with 357,305 for the same 2010 period.

The national average price for a resale home in September was $352,600, up 6.5 per cent from September a year ago.

The report by CMHC came as Statistics Canada said contractors took out $5.6 billion worth of building permits in September, a 4.9 per cent drop from August and the third straight monthly decline.

The value of residential permits declined one per cent to $3.6 billion, while non-residential sector permits fell 11 per cent nationally to $2 billion.

Construction intentions fell in six provinces, with lower construction intentions for both residential and non-residential sectors in British Columbia, and the non-residential sector in Alberta, leading the way.

The value of permits increased in Ontario, Manitoba, Saskatchewan and Nova Scotia.