February 12, 2015 / 2:03 PM / 4 years ago

Canadian home prices rise, but momentum slowing

TORONTO (Reuters) - Canadian home prices rose in recent months, with resale prices up in January after two months of declines and the price of new homes up in December for the fourth straight month, separate reports showed on Thursday.

A general view of new houses which are construction and for sale in San Marcos, California October 25, 2013. REUTERS/Mike Blake

Prices for repeat sales of single-family homes showed national home prices rose 0.2 percent last month and were up 4.7 percent from a year earlier, according to the Teranet-National Bank Composite House Price Index.

The monthly gain snapped a two-month losing streak but showed prices were up in only five of the 11 metropolitan markets.

A separate report by Statistics Canada showed new home prices were up 0.1 percent in December and 1.7 percent higher for the year. The small monthly gain was in line with analysts forecasts.

Canada’s housing market has slowed slightly in the winter months after a strong if not steady five-year gain in prices that had raised some fears of a housing bubble.

Observers have been watching to see whether low interest rates will continue to support what has become an increasingly unaffordable market. The Bank of Canada shocked financial markets by cutting the official overnight lending rate by 25 basis points to 0.75 percent earlier this year.

The Teranet report showed prices rose in January from December by 1.2 percent in Vancouver, 0.9 percent in Victoria, 0.6 percent in Toronto, 0.5 percent in Halifax and 0.3 percent in Edmonton.

Prices were lower in the month in Montreal, Ottawa, Winnipeg, Calgary, Hamilton and Quebec City.

The annual price increase slowed to 4.7 percent, a third straight deceleration.

The Statistics Canada report on prices for new homes, a much smaller market than home resales, showed gains in Ontario and Alberta offset losses in Quebec.

The combined metropolitan area of Toronto and Oshawa was the biggest contributor to the increase, rising 0.2 percent from November. New home prices in Montreal fell by 0.1 percent in the month. The overall new housing price index rose 1.7 percent for the year, with 14 of the 21 metropolitan areas in the survey showing positive growth.

Additional reporting by Jeffrey Hodgson in Toronto and Leah Schnurr in Ottawa; Editing by Meredith Mazzilli

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