TORONTO - A Scotia Economics report says Canada's housing market is cooling, but at a slower pace than most other markets in the developed world.

Scotiabank's latest real-estate outlook said Tuesday that Canada is showing a resilience that few other countries have been able to maintain.

"In the majority of the major markets we track in North America, Europe and Australasia, inflation-adjusted home prices declined on a year-over-year basis in the second quarter of 2011," said Scotia Economics senior economist and real estate specialist Adrienne Warren.

"While Canada's hot housing market also has begun to cool, it remains a notable outperformer."

The bank (TSX:BNS) noted that of the nine major developed markets it tracks, only Canada, France and Switzerland showed housing price increases year over year.

In Canada, existing home prices were up five per cent year-over-year from April to June, while prices appeared to level out in July and August, the report said.

However, the bank pointed to several challenges that could stall the current pace of the domestic housing market.

"Heightened economic uncertainty combined with recent signs of a loss of momentum in Canada's jobs market could keep some potential buyers on the sidelines for the time being," Warren said.

"On balance, we anticipate a modest slowdown in the volume of sales transactions heading into year end, alongside relatively flat prices."