Canadian resale home prices rise in July: Teranet

Wed Aug 13, 2014 10:09am EDT
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By Andrea Hopkins

TORONTO (Reuters) - Canadian resale home prices rose in July and the pace of 12-month price appreciation accelerated, the Teranet-National Bank Composite House Price Index showed on Wednesday, adding to strong housing starts this summer to signal a market that continues to be robust.

The index, which measures price changes for repeat sales of single-family homes, showed national home prices rose 1.1 percent from June, exceeding the historical average for July.

Prices were up 4.9 percent from a year earlier, a pickup from June's 4.4 percent price gain.

The price increases, on top of strong housing starts data released earlier this week, have surprised economists who have been calling for a slowdown in Canada's long housing boom.

Canada escaped the U.S. housing crash that accompanied the 2008-09 financial crisis, and home prices have risen sharply, if not steadily, over the past five years despite moves by the federal government to tighten mortgage lending rules.

A separate report on Wednesday from Canada Mortgage and Housing Corp (CMHC), the federal housing agency, predicted a gradual slowing for the market as buyers mop up excess supply before builders start new projects.

"Recent trends have shown an increase in housing starts, which is broadly supported by demographic fundamentals," CMHC Chief Economist Bob Dugan said in the report. "However, our latest forecast calls for starts to edge lower as builders are expected to reduce inventories instead of focusing on new construction."

The CMHC said housing starts will be in a range of 179,600 and 189,900 in 2014, with a point forecast, or most likely outcome, of 184,800 units, down from 187,923 units in 2013. That is up from CMHC's May estimate of 181,100 units.   Continued...

A home for sale is seen in Toronto, March 11, 2014. REUTERS/Aaron Harris