December's decline bucked a strong year for homebuilding, with total urban starts up 9.2 percent from 2016 as developers continued to build condos and apartments even as Canada's long housing boom showed some signs of slowing.

The seasonally adjusted annual rate of starts declined to 216,980 in December from November's downwardly revised 251,675. Economists had expected a decline to a 212,500 annual rate.

Multiple urban starts, typically condos, fell 22 percent in December while single-detached urban starts rose 4.7 percent, the report showed.

Economists are expecting the torrid pace of homebuilding to cool in 2018 as tighter mortgage lending rules and rising interest rates take some homebuyers out of the market.

"The trend in permits would imply a softer pace ahead and higher rates will take a bite out of housing demand, but residential investment could still be bolstered by projects started in the back half of the outgoing year," CIBC Economics economist Nick Exarhos said in a research note.

For 2017 as a whole, starts were down 0.7 percent in Toronto, Canada's largest city, CMHC said, with demand shifting towards the more affordable condo and townhouse market as years of rising prices made detached homes too expensive for many.

Total 2017 starts were also lower in Vancouver, mostly due to constraints in construction labor and equipment, the federal agency said.

(The story was refiled as CMHC corrects in the second paragraph that apartment starts not total starts were up 6.2 percent from 2016; total starts up 9.2 percent)

(Reporting by Andrea Hopkins; Editing by Chizu Nomiyama and Frances Kerry)

By Andrea Hopkins