TORONTO (Reuters) - Canadian home prices accelerated their decline in February, down 4.1 percent from a year ago, according to a report issued on Wednesday.
The Teranet-National Bank National Composite House Price Index, which measures the rate of change of prices for single-family homes in six metropolitan areas, also showed prices were down 7.4 percent nationally from the peak hit in August last year. Home prices fell 2.4 percent in January from a year earlier.
“The disinflation that began in February 2008 is now a year old. The retreat means that, on the whole, Canadian housing has become a buyer’s market after five years of seller‘s-market conditions from 2002 to 2007,” said Marc Pinsonneault, senior economist at National Bank Financial.
“Will home price deflation worsen in Canada to the extent it did in the U.S.? We do not believe so.”
Home prices in Calgary, Alberta, suffered the biggest year over year drop, falling 8.1 percent in February from the same month a year ago. That was followed by a 6.4 percent slide in Vancouver, British Columbia, and a 5 percent decline in Toronto.
Halifax, Nova Scotia, joined the list of markets with falling home prices, with a 0.5 percent dip.
Meanwhile, home prices rose 3.2 percent in Montreal from a year earlier, and were up 2.8 percent in Ottawa.
Market watchers say current price declines are part of an ongoing retreat since the market hit its peak in 2007.
Housing activity, including resales and ground-breakings, is generally seeing a period of softness in Canada, though the sector has not experienced the same sort of plunge that has been seen in the United States.
Higher existing home sales in February and March, which have been supported by historically low mortgage rates, are seen as an encouraging sign that the sector is stabilizing.
“The report was further confirmation that the Canadian housing market is continuing to weaken, as the worsening economic and labor market conditions continue to sap the life from the once-booming housing sector,” Millan Mulraine, an economics strategist at TD Securities, said in a research note.
“Nevertheless, it is clear that the pace of correction in the sector remains measured and orderly, and appears to be a milder correction than the sharp and prolonged adjustment seen in the U.S. housing sector.”
On a month-to-month basis, national house prices were off 2 percent in February following a 1.6 percent decline in January.
The index showed month-to-month declines in the composite index have now spread to all six markets, with declines from the index’s peak ranging from 1.6 percent in Montreal to 12 percent in Calgary.
Reporting by Ka Yan Ng; editing by Rob Wilson