Canada February new home prices fell amid rate hikes, tighter mortgage rules

FILE PHOTO: A real estate sign is seen in front of a house for sale in Ottawa, Ontario, Canada, August 15, 2017. REUTERS/Chris Wattie/File Photo

OTTAWA (Reuters) - Canadian new home prices fell in February for the first time since July 2010 as recent higher interest rates and tighter mortgage regulations put a damper on the market, data from Statistics Canada showed on Thursday.

New home prices were down 0.2 percent in February after being unchanged for the preceding two months. On an annual basis, prices were up just 2.6 percent, the smallest 12-month increase since June 2016.

The major city of Toronto saw the biggest monthly decline, down 0.6 percent in its largest drop since February 2010, as builders cited unfavorable market conditions.

The Bank of Canada has raised interest rates three times since last July after years of low borrowing costs helped fuel Canada’s housing market.

Tighter mortgage rules that came into effect at the start of 2018 have hit homebuyers, while Toronto has continued to feel the effect of provincial government measures taken last year to rein in surging prices.

Prices were unchanged in Vancouver, Canada’s most expensive housing market. Overall, seven out of 27 of the cities surveyed saw prices fall. The new housing price index excludes apartments and condominiums.

Reporting by Leah Schnurr; Editing by Bernadette Baum