TORONTO (Reuters) - Home resales in Canada dropped in September from August but prices continued to climb, separate reports showed on Wednesday, suggesting tight supply supported prices even as momentum in Canada’s hot housing market may be starting to wane.
The Canadian Real Estate Association (CREA) said sales were down 1.4 percent last month from August, the first monthly decline since January. Sales dropped in about 60 percent of local markets across the country and cooled in several booming markets, including Toronto and Calgary.
The data suggested the five-year runup in Canadian home prices, spurred in part by low interest rates, may be making it difficult for many Canadians to afford their first home or to trade up to a bigger house.
”Sales activity and prices in the third quarter were up compared to the second quarter, although momentum going into the fourth quarter is showing tentative signs of waning,” said Gregory Klump, CREA’s chief economist.
“The continuation of extraordinarily low mortgage rates has been, and will continue to be, the key support for home sales activity amid continuing price increases in some of Canada’s most active and expensive urban centers,” he added.
Actual sales for September, not seasonally adjusted, were up 10.6 percent from September 2013.
“Overall, the headline sales decline is a disappointment, although more data points will be needed to confirm a clear softening trend,” CIBC World Markets economist Nick Exarhos said in a research note.
Prices held firm as the number of houses listed declined 1.6 percent, keeping supply tight.
CREA, the industry group for Canadian real estate agents, said prices rose 5.3 percent from September 2013. The national average price for homes sold in September 2014, not seasonally adjusted, was C$408,795 ($362,696), up 5.9 percent from September 2013.
A separate report on Wednesday told a similar story. The Teranet-National Bank Composite House Price Index showed prices rose 0.3 percent in September from August, boosting the pace of 12-month home price appreciation to 5.4 percent.
The index, which measures price changes for repeat sales of single-family homes, showed national prices once again exceeded the historical average for the month, extending their runup following a brief slump in 2009.
The Teranet report showed prices fell in the month in four of 11 cities, including a 1.8 percent drop in Victoria, a 1.1 percent drop in Ottawa, a 0.9 percent fall in Montreal and a 0.4 percent decline in Hamilton.
Prices were up elsewhere, including a 1.1 percent rise in Calgary, a 0.9 percent gain in Vancouver and 0.7 percent increases in Toronto and Halifax.
Over the past 12 months, prices have increased 9.5 percent in Calgary, 7.4 percent in Toronto, 6.5 percent in Vancouver, 5.6 percent in Hamilton and 5.1 percent in Edmonton.
Editing by Peter Galloway