Canada home sales rise in January, ease correction fears

Fri Feb 15, 2013 3:58pm EST
 

By Claire Sibonney

TORONTO (Reuters) - Sales of existing homes in Canada rose in January from December and fell only modestly from a year earlier, suggesting the housing sector's recent slowdown hasn't developed into a full-blown correction.

Sales were up 1.3 percent in January from December, the Canadian Real Estate Association said on Friday.

The trade group for the country's real estate agents said that compared with a year earlier actual sales for January, not seasonally adjusted, were down 5.2 percent.

CREA's Home Price Index rose 3.1 percent in January from a year earlier, the smallest gain since April 2011.

Year-over-year sales began falling sharply in 2012, hurt by the Canadian government's tightening of mortgage regulations in July. The Conservative government took steps to cool the property market due to fears that ultra-low borrowing costs could fuel a bubble.

Economists have been divided over whether there will be a U.S.-style housing crash or a soft landing in which slower sales gradually stabilize prices.

Canadian home prices rose at the slowest pace in three years in December year-on-year, and housing starts fell more steeply than expected in January.

"We've seen adjustment in the housing market, we think there's a bit more to come in the next few years. Again, I think Canadians have listened to the message and they are adjusting," Bank of Canada Governor Mark Carney told CTV in an interview broadcast on Friday.   Continued...