Canada August resale data signals cooling house market

Wed Sep 19, 2012 11:08am EDT
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By Andrea Hopkins

TORONTO (Reuters) - Canadian home resale prices edged higher in August from July but a slower pace of gains and falling prices in three of 11 markets surveyed suggested the market is cooling, the Teranet-National Bank Composite House Price Index showed on Wednesday.

The index, which measures price changes for repeat sales of single-family homes, showed overall prices climbed 0.2 percent in August from a month earlier, the smallest August gain in 12 years.

The index, which does not provide actual prices, was up 4.1 percent from a year earlier, the ninth consecutive month of deceleration in 12-month gains.

The report is the latest in a string of data suggesting that Canada's long upswing in house sales and prices is coming to an end. With cooling evident in Vancouver and several other major cities, speculation has turned to whether the slowdown will be a soft landing or a crash.

"The latest print for the Teranet HPI reinforces the trend observed in other housing measures with a correction well underway in some key markets," Mazen Issa, Canada macro strategist at TD Securities, said in a note to clients.

"While the national measure has been held up by the buoyancy in prices in Toronto, this market is steadily decelerating on a (year-on-year) basis."

The 0.2 percent monthly gain in August was the sixth such increase in a row and was led by a 2.0 percent rise in Hamilton. Prices rose 0.8 percent rise in Ottawa and 0.7 percent in Toronto and Edmonton. Halifax prices were up 0.5 percent, while Winnipeg and Calgary both notched 0.4 percent gains, and Montreal climbed just 0.1 percent.

Prices fell in three cities. Vancouver led the losses with a 1.2 percent decline, Victoria prices fell 0.7 percent, and prices in Quebec City fell 0.6 percent.   Continued...