TORONTO (Reuters) - A prolonged housing boom in Canada showed signs of slowing in September as home resales fell from a month earlier, especially in the energy capital of Calgary, even as low interest rates lifted national house prices.
Canadian home prices rose 0.6 percent in September from August, the ninth straight monthly increase, and were up a hefty 5.6 percent from a year earlier, the Teranet-National Bank Composite House Price Index showed on Thursday.
Canada’s housing market has been booming since 2009, driven by historically low interest rates and tight supply in the two largest markets, Toronto and Vancouver.
But there have been signs of a slowdown in some places, particularly the oil-producing province of Alberta, and analysts have long called for a correction in prices.
Thursday’s reports showing Toronto and Vancouver prices climbing through the roof continued to raise alarm.
“Continued frothy price gains in the Greater Vancouver Area and Greater Toronto Area mean both regions (which account for about a quarter of the national population) are becoming increasingly vulnerable to a correction if something bad happens,” BMO Capital Markets senior economist Sal Guatieri said in a research note.
The Teranet index, which measures price changes for repeat sales of single-family homes, once again showed a two-track housing market, with prices up in six of 11 markets, namely Toronto, Vancouver, Victoria, Hamilton, Calgary and Halifax.
Prices declined from August in Quebec City, Winnipeg, Ottawa and Montreal, and were flat in Edmonton.
A separate report showed sales of existing homes slipped in September from August, hurt by declines in Toronto, Vancouver and the energy capital of Calgary.
The report from the Canadian Real Estate Association said sales activity fell 2.1 percent last month from August. Actual sales for September, not seasonally adjusted, edged up 0.7 percent from a year earlier.
“The (Greater Toronto Area) and Greater Vancouver made sizeable contributions to the monthly decline in national sales activity. They also rank among the tightest urban housing markets in the country due to a shortage of inventory and supply of land on which to build, which is why prices there continue to grow strongly,” said Gregory Klump, CREA’s chief economist.
The industry group for Canadian real estate agents said its home price index rose 6.9 percent year-over-year in September.
The actual national average price for homes was C$433,649 ($335,486) last month.
($1 = 1.2926 Canadian dollars)
Additional reporting by Jeffrey Hodgson; Editing by Bernadette Baum