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Home prices sag in August 

Tavia Grant
Globe and Mail Update
Published on Wednesday, Sep. 15, 2010 
Resale prices fall for third straight month; CREA says market may continue to soften

Average resale prices deflated in August, marking the third drop in a row, though housing activity unexpectedly picked up in the month.

Resale prices fell to $324,928 in August from $330,351 in July, the Canadian Real Estate Association said Wednesday, and are now 6.3 per cent lower than the record levels they reached in May.

The report comes as several measures of the housing market, from home prices to housing starts and – prior to today’s report – resale activity, have slowed after a blistering start to the year. New home prices fell in July for the first time in 13 months, Statistics Canada said last week. The market will likely continue to soften, the association said.

“Rising interest rates and a projected slowdown in job growth mean that the Canadian housing market is expected to continue to cool,” said Georges Pahud, CREA’s president.

The market appears to have picked up in August after a lull. Resale activity rose 4.1 per cent from the previous month, the first increase in nearly half a year. Much of the resale gains stemmed from busier activity in Ontario and British Columbia. In more than half of all local markets, activity either rose or was stable.

New listings rose 1.6 per cent in August from July, though they remain below their peak.

Prices are now little changed from last year. Average prices eased in Alberta and New Brunswick in August, but gained in every other province. “Increases are shrinking in Canada’s most active and priciest markets,” the report said.

Transactions have risen 2.2 per cent in the first eight months of this year compared to the same period last year.

Canadians sped up home-buying earlier this year, partly to beat an anticipated hike in interest rates and a new harmonized sales tax in Ontario and British Columbia.

“The hangover from accelerated home purchases is likely to persist over the rest of the year,” said Gregory Klump, the association’s chief economist. “Although economic and job growth are expected to be tepid, they will continue to support housing markets.”

Posted on Thursday, September 16, 2010 at 10:50AM by Registered CommenterElaine in | CommentsPost a Comment | References1 Reference

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