UPDATE 1-Canada December home sales dip, prices hold steady

Tue Jan 15, 2013 10:21am EST
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* Sales down 0.5 month/month, 17.4 pct lower than year-earlier

* Prices edge higher, but gains continue to slow

* Impact of tighter mortgage rules will lesson, economist says

By Andrea Hopkins

TORONTO, Jan 15 (Reuters) - Sales of existing homes in Canada fell in December from November and year-over year sales tumbled, the Canadian Real Estate Association said on Tuesday, further evidence Canada's once-hot housing market has slumped.

CREA, the industry group for Canadian real estate agents, said in a report that sales activity was down 0.5 percent in December from November, the third consecutive monthly decline.

Actual sales for December, not seasonally adjusted, were off 17.4 percent from a year earlier, the largest drop since tighter mortgage lending rules went into effect last July.

The federal government tightened the rules after roaring sales since 2009 and historic levels of household debt sparked fears of a bubble. Sales have since slumped 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.

"With the whopping 17.4 percent year-over-year change in sales seen in December, we suspect that the impacts from the mortgage rule tightening in July are now fully priced in," Sonya Gulati, senior economist at TD Economics, wrote in a research note.   Continued...