Canadian home prices rise in May; pace of growth increases

TORONTO (Reuters) - Canadian home prices rose in May to a record high despite a drop in Calgary as weak oil prices continued to hurt demand in Canada’s energy heartland, the Teranet-National Bank Composite House Price Index showed on Friday.

The index, which measures price changes for repeat sales of single-family homes, showed national home prices rose 0.9 percent last month from April.

Prices were up 4.6 percent from a year earlier, an acceleration from April, and set a record nationally even as several key markets have passed their peak.

Prices rose in 10 of 11 major markets. Calgary bucked the trend, falling 3.3 percent from April in the largest monthly drop recorded for the city.

While analysts have long expected Canada’s housing boom to slow, a drop in mortgage rates early in the year has supported continued demand except in resource-dependent Calgary, where a huge drop in oil prices since last year has hurt the economy.

Leading the monthly gains were Halifax at 2.3 percent, Montreal and Toronto at 1.6 percent, Ottawa at 1.5 percent and Vancouver at 1.3 percent.

The gain in Ottawa came after a run of eight declines in nine months.

“In the other markets east of Toronto, namely Montreal, Quebec City and Halifax, prices have risen rather sharply over the past three months after downward corrections that lasted from four to seven months depending on the case,” the report said. “This suggests that these markets are stimulated by historically low mortgage rates.”

From a year earlier, only two markets showed price declines, with Calgary down 1.4 percent and Ottawa down 0.9 percent. Both had peaked in 2014.

By contrast, Toronto, Hamilton, Quebec City and Vancouver remain at record price levels. Compared with a year earlier, prices were up 7.6 percent in Toronto, 6.2 percent in Vancouver and Hamilton, 4.8 percent in Edmonton and Victoria, and 2.9 percent in Quebec City.

Additional reporting by Jeffrey Hodgson; Editing by Bernadette Baum and Lisa Von Ahn