Canada Mortgage and Housing Corp. is bracing for further impacts on the housing market from the COVID-19 pandemic.

The housing market will have to reckon with significant short-term uncertainty, as well as falling housing demand from weaker household incomes in the medium term, the Crown corporation said on Friday.

The Canadian housing market broke sales and price records in July as it continued to play catch-up after spring shutdowns.

But CMHC said the economic shock of the pandemic has not yet been fully reflected in the latest housing market data, predicting the process of containing COVID-19 could still pose a risk to prices, sales and new building projects.

"While it will take several months for the economic impacts of COVID-19 to fully materialize, some factors are starting to work their way into in our financial results -- for example, we are starting to see the impacts in our provisions for insurance claims," said Lisa Williams, CMHC's chief financial officer, in a statement on the corporation's second-quarter financial results.

CMHC is reporting net income of $566 million in the three months ending June 30, up from $379 million during the same period last year, with an arrears rate of 0.34 per cent.

While CMHC took on new government programs and funding, it also saw claims expenses jump by $256 million, or 711 per cent, due to an increase in provisions for COVID-19 related claims, including the outlook for mortgage loans currently in deferral.

CMHC has purchased $5.8 billion of insured mortgage pools this year as part of a government program, and is also administering the Canada Emergency Commercial Rent Assistance program for small businesses.

CHMC's next report will also show the impact of its stricter underwriting criteria, which as of July 1 tightened credit score and down payment requirements for insured mortgages.

The corporation also said it has suspended dividends to save money in case further government action is needed.

"We remain in a strong financial position to bear the full impacts of COVID-19, and to take further steps to support Canadians and the economic recovery if necessary," Williams said.

This report by The Canadian Press was first published Aug. 28, 2020.