Canada home sales rise, household debt ratio eases

Thu Mar 15, 2012 1:23pm EDT
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By Jon Cook

TORONTO (Reuters) - Canadian home sales climbed in February after a soft January and price gains picked up speed, confirming the country's housing market remains buoyant and a potential concern for bubble-wary policymakers.

February existing home sales in Canada grew by 1.4 percent from a month earlier, Canadian Real Estate Association data showed on Thursday.

Sales had fallen 4.5 percent in January from December.

The industry group said sales were up 8.6 percent from a year earlier, compared with a 4 percent gain in January. The annual numbers were not seasonally adjusted.

The national average home price rose 2 percent on a year-over-year basis to C$372,763 ($375,400) in February, compared with a 1.2 percent gain in January.

"The monthly jump will raise eyebrows in Ottawa, where policymakers are growing more concerned about the risks of an overshoot in home prices (and related mortgage debt) that would set Canada up for a harder landing down the road," CIBC World Markets Chief Economist Avery Shenfeld said in a research note.

"That increases the odds of a policy response at some point this year if home price momentum continues, with measures aimed directly at housing and mortgages rather than rate hikes being the likely weapon under consideration."

Some economists and policymakers have expressed concern that the housing market is entering bubble territory in certain cities. Toronto and Vancouver are most frequently mentioned.   Continued...