Globe and Mail Update

September 11, 2008 at 10:15 AM EDT

The rise in new home prices continues to ease as Canada's housing market cools, particularly in the west.

Statistics Canada said Thursday prices for new homes rose 2.7 per cent in July on an annual basis, a slowdown from the 3.5 per cent pace a month earlier.

On a monthly basis, prices rose 0.1 per cent.

"The growth rate of the index has been on a downward trend since Sept. 2006, mainly due to the softening market in Western Canada," the statistics gathering agency said.
Doors of houses in Toronto's Cabbagetown

In Edmonton, for example, prices fell on an annual basis by 5.3 per cent, marking a 23-year low in change, and in Calgary by 0.3 per cent, a 12-year low.

"Markets in these cities continue to adjust after experiencing record price increases in the last two and a half years," Statistics Canada said.

Regina again showed the strongest growth, at 29.6 per cent, although that was down from a record 34 per cent in April.

Saskatoon saw an annual increase of 13.1 per cent, which Statscan noted was further confirmation of a deceleration trend as buildings reported increases "as a result of higher material and labour costs."

Vancouver posted an annual increase of 1.6 per cent, while Toronto saw an increase of 3.7 per cent and Montreal 5.7 per cent.

Eastern Canada was also strong as prices rose 24.3 per cent in St. John's and 7.3 per cent in Halifax on an annual basis.

"This is yet further evidence that the housing market in Canada continues to cool as the housing cycle winds down," TD Securities senior economics strategist Charmaine Buskas said in a research note examining the cross-country data.

"Looking ahead, there is scope for further correction, in line with a normal housing cycle."