Canada home resales revive as affordability up -RBC

* RBC says home affordability in Canada improved in Q1

* Vancouver more affordable, but still costliest in Canada

TORONTO, July 8 (Reuters) - The resale housing market in major Canadian cities is in the midst of revival following a winter freeze-up, with buyers attracted by increased affordability, a report by RBC Economics said on Wednesday.

In its quarterly trends and affordability report, the economics unit of Royal Bank of Canada said aggressive economic measures taken by the federal government and softening home prices have helped increase affordability and that there are signs that the housing market has stabilized coast to coast.

The cost of owning a typical detached bungalow in Canada fell by close to 17 percent in the first quarter from a year earlier, the RBC affordability index showed. The index measures the proportion of pretax household income needed to service the cost of owning a home.

"Sales have rebounded, and quite considerably in some areas, which we take heart that we have indeed avoided a U.S.-style meltdown," said Robert Hogue, a senior economist at Royal Bank, the country's biggest bank. "We're not quite sure if we're totally out of the woods yet, but things have at least stabilized."

One risk to the outlook is the uncertainty of the timing of the economic recovery. RBC expects the Canadian economy to recover over the second half of the year.

RBC's affordability measure for detached bungalows in all of Canada's largest cities showed improvement in the first quarter from the fourth quarter.

Vancouver, British Columbia, had a reading of 62.6 percent in the first quarter, down from 69.3 percent in the fourth quarter, making it the highest-cost market among six metropolitan areas surveyed. The higher the reading, the more costly it is to carry the costs of home ownership.

RBC's report supports other recent indicators that show the residential housing market is on the path to stabilization. On Tuesday, Royal LePage, a leading real estate company, said low mortgage rates and leveling unemployment have helped the market return to a more even keel. [ID:nN07326541] (Reporting by Ka Yan Ng; editing by Peter Galloway)