TORONTO (Reuters) - Sales of existing homes in Canada dipped for a second straight month in February, but remained high on a year-over-year basis, as the market may be moving into more balanced conditions, data showed on Monday.
The Canadian Real Estate Association (CREA) said a total of 42,799 homes changed hands last month, down 1.5 percent from January, as a large gain in sales in Toronto were offset by declines in Vancouver and other British Columbia housing markets.
The report was welcomed by Finance Minister Jim Flaherty, who said the country's cooler home resales data was headed in the "right direction." He also repeated that there is no evidence of a housing market bubble in Canada.
Across Canada, sales rose 44 percent from the same month last year, a smaller gain in national activity from the previous three months. This was in line with economists' views that year-over-year comparisons are likely to shrink in coming months because the recovery of the housing market started in February 2009.
After a relatively short spell of low consumer confidence during the global financial crisis, Canadian homebuyers quickly returned to the market, taking advantage of record low interest rates, and made the housing sector one of the cornerstones of the domestic economic recovery. The overall pace of the rebound in the past 12 months has encouraged debate about a housing bubble.
"Looking beyond the buoyant year-on-year gains in sales and prices, most of the underlying statistics reveal that the broader housing market is beginning to simmer down after last year's amazing turnaround," said Doug Porter, deputy chief economist at BMO Capital Markets.
"It appears that the housing market will pull up just short of bubble territory."
Buyers looking to get into the market before interest rates likely start rising this year, and ahead of new mortgage rules in April, could also contribute to a burst of sales before the sector cools in the second half of the year.
"We should see the Canadian housing market move slowly back into a balanced-market position as higher mortgage rates and prices begin to temper demand," said Millan Mulraine, economics strategist at TD Securities.
Also, rising supply -- new listings rose for a fifth straight month, up 2.4 percent -- could take the steam out of the housing markets as the year progresses, said Gregory Klump," CREA's chief economist..
CREA said the national average home price in February rose 18.2 percent from a year earlier to C$335,655 ($329,074).
The Winter Olympics, which were held in the host city of Vancouver and nearby areas, may have played a factor in lower sales in the province last month so activity will be "closely watched" in March, the real estate group said.
Unit sales in British Columbia were down 13.3 percent in February from January, compared with a 3.3 percent advance in Ontario. Both these markets are expected to see a heated spring housing season before new harmonized sales tax regimes come into effect in July.
Additional reporting by Walden Siew in New York; editing by Rob Wilson