* Jan housing starts fall to 197,900 units, above estimates

* Multiple-unit construction still seen strong

* Most analysts expect gradual slowdown in housing market

OTTAWA, Feb 8 (Reuters) – Canadian housing starts
declined in January from December, but construction was still
stronger than expected and shows little sign of slowing in the
multiple-unit segment, according to a report by Canada Mortgage
and Housing Corp (CMHC) on Wednesday.

The seasonally adjusted annualized rate of housing starts
was 197,900 units, compared with 199,900 units a month earlier.
The December figure was revised down slightly from 200,200 units
reported previously.

The number of starts was above the consensus expectation of
analysts, who had called for 194,000 starts.

“The latest building permits and housing starts data
indicate that new housing construction is not slowing down
much,” said David Madani, economist at Capital Economics.

“Although this is good for economic activity this quarter,
we are still concerned about the associated over-building and
rising likelihood of a housing slump down the road,” he wrote in
a note to clients.

Canada’s hot housing market helped fuel its quick recovery
from a 2008 recession. But more recently it has put policymakers
on the alert as rising prices and heavy borrowing by buyers at
record-low rates raised fears of a housing bubble.

The Bank of Canada has suggested some markets may be
overvalued, and says it is closely monitoring the situation
along with the finance ministry and regulators.

Data released by Statistics Canada on Tuesday showed the
value of building permits taken out by contractors in December
soared to a 4-1/2 year high thanks to a hot condo market in
Ontario.

The CMHC report showed the seasonally adjusted annual rate
of urban starts fell by 2.8 percent to 176,600 units.

Multiple-unit urban starts, which include condominiums, eked
out a 0.4 percent gain to 111,700 units following a huge 14.5
percent jump in December. Urban single starts decreased by 7.8
percent to 64,900 units.

Most analysts are betting on a soft landing rather than a
U.S.-style crash in housing this year.

“We anticipate that residential construction activity will
continue to ease at a fairly gradual rate during the forecast
horizon, reaching an annual pace of 183,000 in 2013,” said David
Onyett-Jeffries, economist at RBC Economics.

Tiff Macklem, the No. 2 at the central bank, noted on
Tuesday that there has been some slowing in household credit
growth, although he repeated concerns that some borrowers were
spending more than they can earn.