Canadian house prices edge higher in April

Tue May 14, 2013 10:52am EDT
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By Andrea Hopkins

TORONTO (Reuters) - Canadian home prices rose in April from March as three strong cities in Western Canada more than offset weak showings elsewhere, while the annual gain in prices slowed, the Teranet-National Bank Composite House Price Index showed on Tuesday.

The index, which measures price changes for repeat sales of single-family homes, showed overall prices rose 0.2 percent in April from a month earlier, but the weakest April gain in 15 years except for the 2009 recession.

The index was up 2.0 percent from a year earlier, the smallest 12-month gain since November 2009.

The report suggested Canada's housing market has regained some spring strength after a long, slow winter of declines following the government's move to tighten mortgage lending rules in July 2012, but remains subdued.

"We view this report as broadly consistent with stabilization in the housing market over the near-term. Sales activity has been better supported recently ... which in turn should also help carve out a trough in national home prices," Mazen Issa, Canada Macro Strategist at TD Securities, said in a research note.

"Taken in context with the healthy correction in sales and building activity, today's report further underscores the recent constructive developments in household imbalances," Issa said.

Canadian policymakers, including Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have repeatedly warned consumers about taking on too much household debt to get into the housing market, and have been trying to engineer a soft landing for the sector by tightening bank lending rules.

Residential real estate activity typically picks up in the spring, and economists have been waiting to see if demand will return after a dramatic slowdown since the middle of 2012.   Continued...