UPDATE 1-Canadian home sales edge up, housing starts to stabilize

Thu Aug 15, 2013 12:01pm EDT
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By Andrea Hopkins

TORONTO Aug 15 (Reuters) - Sales of existing homes in Canada edged up in July from June and were much higher than a year earlier, the Canadian Real Estate Association (CMHC) said on Thursday in a report that suggested the housing market has leveled off after a spring surge.

The industry group for Canadian real estate agents said sales were up 0.2 percent in July from the month before. Actual sales for July, not seasonally adjusted, were up 9.4 percent from a year earlier.

July's increase lifted sales to just below levels reached before Canada's Conservative government tightened mortgage lending rules last summer.

Fearing a housing bubble after years of heated activity, the government changed lending rules to make it harder to take on too much debt to buy a house. The changes, which took effect in July 2012, shortened the maximum length of a government-insured mortgage and limited the amount that people can borrow against their homes.

The housing market slowed dramatically in response to the tighter rules, and some economists worried that the U.S. housing crash of the last decade would be repeated in Canada. But prices, which lag sales activity, have so far only slowed their rise, and the spring market brought the traditional seasonal bounce in home buying.

That now appears to be leveling off.

"More evidence that Canada's housing market has absorbed last year's mortgage rule tightening, and that the overall market remains balanced and well-behaved," BMO Senior Economist Robert Kavcic said in a research note.   Continued...