TORONTO - Canadian home prices were up 13.6 per cent in June from a year ago -- further evidence that price adjustments are lagging behind falling demand and sales in the housing market.
Month over month, June prices were up 1.5 per cent -- the largest monthly increase since last August, according to the Teranet--National Bank composite house price index, released Wednesday.
June marked the 14th straight monthly increase in home prices, the longest run since October 2006.
Home sales have fallen 25 per cent since reaching a peak at the beginning of the year as demand has slows and more houses come onto the market, but prices continue to rise.
Price increases in June were driven by the bustling housing markets of Vancouver and Toronto, where many buyers entered the market in advance of the new harmonized sales tax that took effect July 1 in Ontario and British Columbia.
But a report on the index -- a compilation of average home price changes in six metropolitan areas -- said that since the resale market has been slackening across the country, it is too early to conclude that vigorous price rises in April, May and June represent a trend.
"The prospect of harmonized sales taxes coming into effect July 1 in Ontario and B.C. may have stimulated sales in Vancouver, Toronto and Ottawa in the preceding months," the report said.
Seasonally-adjusted home sales fell 8.2 per cent in June from the month before and shrunk 19.7 per cent compared to June 2009, according to the Canadian Real Estate Association.
However, the average Canadian home price sat at $342,662 compared to $326,689 in 2009.
Sales activity peaked in December 2009 and hovered near record levels during the first quarter of this year as buyers rushed into the housing market ahead of changes to mortgage rules, interest rate hikes and the HST.
Activity so far this year is up 5.6 per cent compared to the first seven months of last year, but the gap is expected to shrink as the year progresses because sales ramped up heavily during the latter part of 2009.
