Christie's Real Estate Team

OTTAWA -- Home sales in the country's major cities eased in August, down 5.3 per cent from July, when monthly sales were the second-highest on record, a new report released Friday shows.

Seasonally adjusted national sales activity in August was 29,717 units, according to the Canadian Real Estate Association, which said the reduction in sales levels was primarily

driven by fewer sales in Toronto, Montreal, Edmonton and Vancouver.

The average price rose 11.2 per cent year-over-year to $325,881 in August, but fell $6,500 from July 2007.

Average prices reached records in Saskatoon, Sudbury, Windsor and St. John's and remained above levels recorded in August 2006 in all major markets, CREA said.

"There were adjustments to mortgage rates in July that may have had an impact on the re-sale housing market in August," said Gregory Klump, chief economist at CREA, "but the housing market continued at near-record levels because the Canadian economy is strong and two factors that influence housing -- employment and consumer confidence -- are strong."

A decline in Toronto and Vancouver helped reduce new listings to 48,817 units. Despite the 1.5-per-cent reduction, the levels are still healthy, as August new listings were the sixth-highest on record and included a rise in listings in Calgary, Winnipeg and Saskatoon, CREA said.

The marginal decrease in new listings combined with the August decline in sales have eased market conditions compared with July, the association added.

"The move to a more balanced market means some buyers will take more time to shop," said CREA president Ann Bosley. "With a higher supply and continued strong demand, we anticipate the resale housing market will remain strong and steady for the balance of the year.

"This is a housing market built on good fundamentals, including good lending practices."

A separate report Thursday from Scotia Economics cautioned that home prices across Canada are ripe for a fall.

Adrienne Warren, senior economist with Scotia Economics, said a bustling market has led to housing in many regions of the country being overvalued, increasing the risk of prices dipping in the longer-term.

Also last week, RBC Economics reported that housing affordability in Canada in the second quarter worsened in every housing type, every province and every major city, owing to higher house prices, mortgage rates, utilities and property taxes.

© The Vancouver Province 2007