* Sales of existing homes up 0.8 pct in Sept-CREA
* CREA home price index up 3.1 pct from year ago
* Teranet housing price index flat in Sept
By Leah Schnurr
TORONTO, Oct 15 Sales of existing homes in
Canada jumped in September from a year ago and prices rose,
though analysts cautioned the gains came partly on the back of
depressed activity in 2012 that followed tighter mortgage rules.
Still, compared to August, sales in September edged up 0.8
percent, the Canadian Real Estate Association (CREA) said on
Tuesday, suggesting Canada's resilient housing market is still
The housing sector has been a major driver of Canadian
economic growth coming out of the recession, but the market has
been plagued by worries it has over-extended itself and is due
for a correction.
Concerned about high levels of household debt, the
government tightened mortgage lending rules four times since the
financial crisis. After the latest intervention, in July 2012,
the property market cooled markedly. But the market bounced back
this spring, with many buyers making purchases ahead of an
expected increase in borrowing costs.
Last year's lower levels pushed September's actual sales
activity up 18.2 percent compared to September 2012 on a
"This report points to signs of stabilization in the housing
market, which is a welcome development after a period of
resiliency this year," Mazen Issa, macro strategist at TD
Securities, wrote in a note.
"The ramp up in activity in this year is consistent with the
temporary impact of tighter mortgage regulations from summer
2012, while the back-up in mortgage rates in recent months has
pushed fence-sitters with pre-approved mortgages to enter the
market," Issa wrote.
High consumer debt and slower mortgage growth should
naturally slow momentum in the housing market, said Issa.
Just over half of all local markets saw improved sales, with
gains in Vancouver and Toronto offsetting declines in Calgary
The number of newly listed homes declined by 1.4 percent on
a monthly basis. About 340,980 homes have changed hands in
Canada so far this year, 1.8 percent below levels seen in the
first three quarters of 2012.
"The market seems to be evolving fairly constructively at
this stage," said Robert Hogue, senior economist at Royal Bank
After fears of higher rates pushed some potential buyers to
take the plunge in August, home sales figures could see some pay
back for that increase in the months ahead, Hogue said.
"We wouldn't expect that pay back to be that dramatic, but
it might be just enough to ease any kind of emerging concerns
the market is heating up again."
Existing home sales climbed 2.8 percent in August.
CREA's MLS Home Price Index showed prices rose 3.1 percent
in September from last year.
A separate report showed home prices flattened at record
levels in September, pointing to a cooler than usual market.
The Teranet-National Bank Composite House Price Index showed
prices were unchanged last month from August, though the index
was up 2.7 percent on an annual basis due to a decline in prices
in September 2012.