UPDATE 2-Canadian October home sales dip, latest sign of cooling

Thu Nov 15, 2012 11:23am EST
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* Home sales drop from month and year earlier

* Home price index up 3.6 pct, smallest gain since May 2011

By Andrea Hopkins

TORONTO, Nov 15 (Reuters) - Sales of existing homes in Canada fell in October from September and year-over-year sales were down as well, the Canadian Real Estate Association said on Thursday in the latest signal that the housing market is slowing.

The industry group for Canadian real estate agents said sales were down 0.1 percent in October from September. Actual sales for October, not seasonally adjusted, were down 0.8 percent from a year earlier.

The housing market, which roared higher in 2011 and the first half of 2012, started to slow after the government tightened rules on mortgage lending in July in a bid to cool the market and prevent home buyers from taking on too much debt.

"Housing market trends in Canada for 2012 can be characterized as before and after regulatory changes," TD Economics senior economist Sonya Gulati said in a research note.

"In the first half of the year, sales and price gains were modest, but positive. More stringent mortgage rules and tighter mortgage underwriting rules have 'purposely' knocked the wind out of the housing market sails," she said.

The home sales data showed diverging paths in Canadian housing depending on location. In Toronto and Vancouver, where sales and price gains were red hot in 2011 and early in 2012, the market has been cooling. But markets in the resource-rich western provinces of Saskatchewan and Alberta have been gaining strength.   Continued...