According to Canada Mortgage and Housing Corp. the slump in the economy will drive new home construction to a nine-year low in 2009. This prediction comes in stark contrast to what the Crown Corporation was saying in November.

In defense, Bill Clark, senior economist with CMHC, said that it was not possible last quarter to predict the economic decline we are now witnessing its impact on the economy.

Three months back CMHC conjectured that there would be 177,975 new homes built this year. On Thursday the figure was attuned to 160,250 a_" a level not seen since
2000. The forecast implied a 24 per cent down turn from the 211,056 units constructed last year.

"There have been some issues that have come up in the economy that were not foreseen, that's been the case for much of the forecasting," said Clark.

Benjamin Tal, a senior economist with CIBC World Markets opines that the deficiency in liquidity in the housing market makes it very difficult to estimate where exactly prices will finally settle.

"The resale market is basically paralyzed," said Tal. "The market is in a state of shock. Nothing is happening. The prices we are getting now are just a rough proxy. It's not an accurate reading."

Tal predicts further fall in housing prices due to the rise in unemployment rate.