TORONTO - National resale housing activity continued to rise in December, up 1.8 per cent compared with November, the Canadian Real Estate Association said Monday.
CREA says the December figures represented the fourth consecutive monthly increase in home sales and pushed annual sales to almost 457,000 units, up 2.2 per cent over 2010.
However, the price increase on a national basis in December was relatively modest, up just 0.9 per cent compared with December 2010.
Meanwhile, CREA said the number of newly listed homes on its Multiple Listing Service increased three per cent from November to December, but that the national resale housing market remained in balanced territory.
The latest read on the Canadian housing market, while in positive territory, was below the expectations of some analysts on both sales and prices.
However, BMO Capital Markets economist Robert Kavcic wrote in a report that the December numbers were likely to presage a cooling market.
"Looking ahead to 2012, cooler housing activity should prevail as elevated household debt levels, shaky confidence and a weakened job market counter extremely low mortgage rates," Kavcic said.
Late last week, some of Canada's biggest banks began advertising promotional ultra-low mortgage rates as their battle for customers intensified.
The Bank of Montreal (TSX:BMO) began the marketing race with a special discount five-year fixed rate at 2.99 per cent for a limited time and with limits on payment options.
TD Bank (TSX:TD) responded with a four-year special fixed rate at 2.99 per cent available until the end of February, pointedly noting that takers would still be entitled to all the bank's usual early payoff options.
Meanwhile, the Royal Bank (TSX:RY) later matched those offers with its own four-year 2.99 per cent rate offer, along with a seven-year special fixed rate of 3.99 per cent.
Royal LePage Real Estate Services has predicted the price of homes in Canada will continue rising this year, but the hottest markets in Toronto and Vancouver will grow much more slowly than in 2011.
The country's largest real estate broker said low mortgage rates will continue underpinning housing demand despite the weakening economy.
The International Monetary Fund has suggested that Canadian homes on average are 10 per cent overpriced and warned it may be a factor that puts the country's economic recovery at risk.
The Bank of Canada has also repeatedly cautioned prospective buyers to guard against being lured by low mortgage costs because interest rates and therefore monthly payments, will eventually increase as the economy gets stronger.
IS CANADA'S HOUSING MARKET OVERHEATED?