OTTAWA (Reuters) - The housing boom in Canada’s hottest cities has spilled over into the suburbs, where builders say they are working as fast as they can to meet soaring demand and get homes to market before a much-feared housing bust.

A home is put up for sale in downtown Montreal, July 14, 2009. REUTERS/Shaun Best

With the supply of existing homes at a six-year low and the average price up 11.2 percent from a year ago, according to data released on Friday, new developments have become the next frontier in a what some fear is a housing bubble.

Canadian new home prices rose 0.7 percent in May, the largest monthly increase since 2007, Statistics Canada said on Thursday.

Builders with decades of experience say they have not seen anything like it, and are eager to build while the boom lasts.

“It’s definitely ‘Build as quickly as possible and get your pre-sales out,’” said Robert de Wit, chief executive of the Greater Vancouver Home Builders’ Association.

But with land prices rising as quickly as home prices, builders are paying a lot of money now for land that may not have a house on it to sell for two years.

“They are gambling. They are taking a calculated risk. They are buying the land at prices that anticipate future prices going up,” de Wit said.

Builders say it is a challenge to find enough skilled tradespeople to do the work, while entire developments sell out within days of being advertised - months before construction even begins.

“It’s scary to try to figure out what’s going on with the marketplace,” said Heather Weeks, marketing manager at Rosehaven Homes, which builds in the outskirts of Toronto.

“People are still in a bit of panic trying to get in a house, even knowing the prices are constantly going up. I thought we would have hit a ceiling by now, but apparently we haven’t. It’s worrisome.”

Fears of a Canadian housing bubble have risen amid double-digit price increases in Toronto and Vancouver, the two largest markets, even as other markets have cooled.

Tony Mauro, co-president of Fairgate Homes, a family-run builder near Toronto, said he wishes he had a crystal ball to help him gauge when the boom will end - as he believes it will.

“I don’t see it being sustained,” said Mauro. “(I’m just) being cautious. You don’t stick your neck out, you make sure you’re not taking on too much, so that if the market turns down or sales stop, you’re not going to be out of business.”