The Crown corporation said net income for the three months ended June 30 was $335 million, down from $383 million in the same period a year earlier.
CMHC said the drop was due to impairment losses on equity investments as well as an increase in net claims.
Revenues were $3.2 billion, down from $3.3 billion. CMHC attributes the decrease to lower interest income from mortgage-backed securities.
"Overall, Canadian housing markets are supported by economic and demographic fundamentals; however, CMHC continues to closely monitor activity," CMHC said in its quarterly report.
Housing starts have been on an upward trend, but CMHC doesn't necessarily see that continuing.
"Some reduction of the current robust pace of housing starts is expected later this year and next year," it said.
The agency is calling for balance in most housing markets in Canada as total residential sales through the Multiple Listings Service are expected to remain "relatively stable" for the rest of 2012 and in 2013.
"The average MLS price decreased 0.8 per cent in July 2012 and future growth is expected to be somewhat subdued," CMHC said.
CMHC was created by the Canadian government in 1946 to address the country's post-ward housing shortage. Now, it provides various levels of mortgage insurance to protect lenders from defaults by homebuyers. It also closely monitors residential construction activity and housing sales and provides outlooks used by various sectors of the economy.