"We finally are beginning to see a slowdown in Canada, but we're lagging the U.S. by about 18 months," said Adrienne Warren, senior economist with Scotia Economics. "We don't expect ... the same type of downturn as in the U.S., primarily because the inventory situation is very different in Canada and the U.S."

Risky lending practices, overbuilding and, more recently, a rise in foreclosures have seen near-record numbers of unsold homes clogging up the U.S. market and pushing down prices.

While the Canadian market is cooling, Warren said more conservative lending practices make a U.S.-style meltdown unlikely. Inventories -- existing homes for sale plus newly finished unsold properties -- have risen in Canada. The increase in inventory in Canada is manageable, Warren said.

"You would tend to expect after a long housing boom that there will be a little bit more supply coming onto the market.

"What we're looking at now is more of a balanced market in Canada as opposed to the U.S.-style buyers market." Price increases will be "relatively flat, rising in line with inflation."

The report said home-building over the past decade has been outstripping the rise in new households.

"Part of this was manageable with a very strong economy, and people were buying homes at an even stronger rate than you might otherwise expect." said Warren.

"We did see in this latest housing boom in Canada, a lot of the increase came from young people entering the housing market earlier than they had in past generations, often skipping the rental market entirely."

A sustained economic downturn would likely see people delaying entering the housing market.

"With a softening economy, you might see a little bit of a delay of that trend or for how quickly new immigrants move from perhaps staying with a family member into the housing market themselves," said Warren.