After a 22 percent drop in profits last year, Canada’s residential construction industry can expect profitability to decline further in 2008, according to the Conference Board’s Canadian Industrial Outlook: Canada’s Residential Construction Industry -Winter 2008.

With a growing inventory of new homes, declining housing starts and weaker price growth, builders’profits are expected to shrink over the next two years,”said Valérie Poulin, economist.

Profits are expected to fall slightly from 2007 levels to $3.3 billion in 2008. Profitability is expected to decrease by another four percent in 2009, before improving gradually beginning in 2010.

However, profit margins will remain higher than historical norms, staying above their 17-year average over the …