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UPDATE 2-Canada home price index at new record, but may cool
* Home prices hit record high, but signs of cooling seen
* June 7th straight month of slower year-on-year gains
* National prices up 5.4 pct from year earlier
By Andrea Hopkins
TORONTO, July 25 (Reuters) - Canadian home prices hit a third straight record high in June, but a slowdown in the pace of price increases suggested the red-hot housing market is cooling, the Teranet-National Bank Composite House Price Index showed on Wednesday.
The index, which measures price changes for repeat sales of single-family homes, showed overall prices climbed 1.2 percent in June from a month earlier. From a year earlier, the index was up 5.4 percent. But it was the seventh straight month in which year-on-year price gains slowed.
"The 11-city composite index has steadily decelerated on a year-ago basis since late 2011. We would have seen a sharper deceleration in the index if it were not for the Toronto market - which holds the greatest weight in the index," Mazen Issa, Canada macro strategist at TD Securities, said in a note.
None of the 11 metropolitan markets surveyed showed a price decline from the month before. The same was true in May. No actual prices were given.
The producers of the data noted that the sharpest monthly changes in the index tend to occur in May and June.
A long run-up in Canadian house prices and low supply in some markets has sparked concern that a housing bubble may be forming. The federal government has tightened mortgage lending rules four times in four years to try to prevent borrowers from taking on too much debt to buy into the market.
Those moves, combined with already slowing demand, should help ensure the housing boom deflates rather that bursts, Issa said.
"We believe that the combination of tighter mortgage regulations and a more frugal household will slow housing activity in Toronto, bringing it closer in line with the broader national market, which remains on course for a soft landing," he wrote in the research note.
Toronto prices rose 1.6 percent in June, and Montreal prices were up 1.1 percent, the sixth consecutive monthly gain for both cities. In Vancouver, where the market appears to be cooling, prices rose just 0.5 percent.
Prices rose 1.7 percent in Calgary and in Ottawa-Gatineau, 1.5 percent in Winnipeg, 1.4 percent in Quebec City, 1.3 percent in Edmonton, 0.9 percent in Halifax, and 0.7 percent in Victoria and in Hamilton, Ontario.
The index was at a record high in eight of the 11 markets surveyed.
Year-on-year prices were up 9.5 percent in Toronto, followed by Winnipeg, where they were up 7.8 percent. In Vancouver, the 12-month gain dropped below the national average to 3.1 percent.
The index, which is similar to the U.S. S&P/Case-Shiller home price index, tracks repeat sale prices, so properties with at least two sales are required in the calculations. It lags other home resale data by about six weeks.
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