Canada Aug new home prices up less than expected

Tue Oct 13, 2009 12:47pm EDT
 
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OTTAWA (Reuters) - New house prices in Canada were higher for a second straight month in August, though not by as much as expected, showing a small sign of fragility among recently robust housing market indicators.

Statistics Canada said on Tuesday that prices for new homes rose 0.1 percent from July, just shy of the 0.2 percent climb expected by analysts surveyed by Reuters.

The report on new home pricing is a small blip among other data portraying a recovery in the housing market, helped by rock-bottom interest rates and confidence-boosting signs of an economic rebound. Canada's housing market has slumped during the recession but did not undergo a U.S.-style crash.

"Overall, the report suggests that despite the rebound in the Canadian housing market and the dramatic turnaround in existing home prices in recent months, new home prices remain fairly weak," said Millan Mulraine, economics strategist at TD Securities.

Statscan said decreases in the cities of Hamilton and Windsor, Ontario, and Edmonton, Alberta, partly offset price hikes in St. John's, Newfoundland, and the province Quebec.

Compared with August 2008, prices were down 3.1 percent with the biggest declines in Western Canada, where the real estate market eased from red-hot highs a year earlier.

"Over the past few months, some builders in Alberta and British Columbia have offered lower prices, bonuses and incentives to motivate sales in the face of weaker market conditions," Statscan said.

Edmonton, Alberta, led the year-on-year declines with an 11.4 percent decrease, while another city in the province, Calgary, dropped 6.3 percent. In British Columbia, prices for new homes fell 10 percent in Victoria and were off 7.8 percent in Vancouver.

In Toronto, prices were off 1 percent year-over-year, but rose 0.2 percent from July.

(Reporting by Louise Egan and Ka Yan Ng; editing by Peter Galloway)