Canada home resales rise in February, prices drop

Sales of existing homes in Canada rose in February from January, the first month-on-month rise since September, but prices dropped sharply, the Canadian Real Estate Association said on Monday.

Nationally, 28,669 homes were sold in February, up 8.6 percent from the month before on a seasonally adjusted basis.

But the average home price fell 9.2 percent to $281,972 from $310,379 a year earlier.

On a year-over-year basis, sales were down 31 percent in February. That was the smallest year-over-year decline since October, the association said.

The figures are a mildly positive sign that the property market is stabilizing, said Douglas Porter, deputy chief economist at BMO Capital Markets.

"It looks like the Category 5 hurricane which had been pounding the home resale market has been downgraded to just a Category 4," he said.

Sales picked up in the western provinces with British Columbia reporting a 14.4 percent increase, while Alberta posted an 11.9 percent rise. Sales in Ontario and Quebec were in line with the national average. On the East Coast, Nova Scotia had a 12.7 percent monthly increase.

Manitoba had the biggest drop, down 11.8 percent last month.

The real estate association said historically low mortgage rates and improved affordability helped create interest last month, though supply remains high. It said the economic uncertainty may keep buyers in a "cautious mood".

Prices were lower in 14 of 25 major markets that the association measures, with the biggest drops in Vancouver, British Columbia; Calgary, Alberta; and Windsor, Ontario.

Vancouver, where home prices have fallen steadily since mid 2008, had a 13 percent year-over-year average decline in prices, and the worst drop in sales in major markets.

Saint John, New Brunswick, and the province of Newfoundland and Labrador were among markets that reported sharply higher average home prices, up more than 20 percent each.

"In the final analysis, the report does offer some hope that the decline in Canadian home prices may have stabilized somewhat in February after appearing to have accelerated in the latter months of 2008," said Millan Mulraine, an economics strategist at TD Securities.

"And the increase in sales is certainly a welcome development, though possibly influenced by the weather."

(prepared by Ka Yan Ng; Editing by Peter Galloway/Conde Nast Portfolio)