WRAPUP 1-Canadian home resales ease in September, prices keep rising

Wed Oct 15, 2014 10:51am EDT
 
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By Andrea Hopkins

TORONTO Oct 15 (Reuters) - Home resales in Canada dropped in September from August but prices continued to climb, separate reports showed on Wednesday, suggesting tight supply supported prices even as momentum in Canada's hot housing market may be starting to wane.

The Canadian Real Estate Association (CREA) said sales were down 1.4 percent last month from August, the first monthly decline since January. Sales dropped in about 60 percent of local markets across the country and cooled in several booming markets, including Toronto and Calgary.

The data suggested the five-year runup in Canadian home prices, spurred in part by low interest rates, may be making it difficult for many Canadians to afford their first home or to trade up to a bigger house.

"Sales activity and prices in the third quarter were up compared to the second quarter, although momentum going into the fourth quarter is showing tentative signs of waning," said Gregory Klump, CREA's chief economist.

"The continuation of extraordinarily low mortgage rates has been, and will continue to be, the key support for home sales activity amid continuing price increases in some of Canada's most active and expensive urban centers," he added.

Actual sales for September, not seasonally adjusted, were up 10.6 percent from September 2013.

"Overall, the headline sales decline is a disappointment, although more data points will be needed to confirm a clear softening trend," CIBC World Markets economist Nick Exarhos said in a research note.

Prices held firm as the number of houses listed declined 1.6 percent, keeping supply tight.   Continued...