By Andrea Hopkins
TORONTO, March 15 (Reuters) - Sales of existing homes in Canada fell in February from January while year-over year sales plummeted, the Canadian Real Estate Association said on Friday in a report that bolstered evidence Canada's once-hot housing market is slowing.
The industry group for Canadian real estate agents said sales were down 2.1 percent in February from the month before, reversing the small gain recorded in January. Actual sales for February, not seasonally adjusted, were down 15.8 percent from a year earlier.
CREA's Home Price Index rose 2.7 percent in February from a year earlier, the smallest gain since March 2011.
"February 2012 saw an extra selling day due to the leap year. However, the year-over-year decline between this February and last year is largely a reflection of demand that is well off from 2012," Gregory Klump, CREA's chief economist, said in a statement.
CREA said the government's move to tighten mortgage lending rules in July 2012 has slowed the market, and lower activity is expected until at least the June-to-August peak season.
"Until we get well into the summer months, year-over-year comparisons to months in the first half of 2012 are predictably going to be down significantly but not necessarily be indicative of further deterioration," Klump said.
"Rather, year-over-year comparisons will continue to reflect the long shadow cast by higher sales prior to last summer's policy tightening. Looking at the monthly trend since then shows that we've been seeing reasonably stable trends for demand and prices."
The federal government tightened the rules after roaring sales since 2009 and historic levels of household debt sparked fears of a bubble. Sales have slumped since, and economists are divided over whether there will be a U.S.-style housing crash or a soft landing of slower sales and gradually declining prices.
The number of newly listed homes fell 1.2 percent month over month in February, leaving them at their lowest level since November 2010, CREA said.
There were 6.8 months of inventory at the end of February 2013, up from 6.6 months reported at the end of January.
The real estate group said the national average price, not seasonally adjusted, for homes sold in February 2013 was C$368,895 ($359,500), representing a 1 percent decline from the same month last year.