Canadian house prices: a regional picture
By Peter Diekmeyer • Bankrate.com

In fact, things are going so well that CREA experts, though cautious, expect a positive year for housing prices. "The resale housing market is more balanced that it was last year in all major urban centres," says Gregory Klump, the association's chief economist. "The frenzied pace for sales activity has faded, with buyers now better able to shop around before making an offer. Price increases are expected to be modest in the second half of 2008, as sales continue easing and listings remain high."

New listings remain high
So, if many housing sector indicators continue to look relatively strong, how could the average selling price of existing homes have fallen last month? Well for one, the amount of new listings is also very high. According to CREA, 332,958 units were put up for sale during the first half of the year, up 8.1 percent compared to the same period the year before. And when there are more homes to choose from, shoppers can haggle to get a better deal.

However, even more importantly, much of the decline in average house prices is simply a reflection of previous surges that occurred in the Calgary and Edmonton areas. For example, during 2006 and 2007, the average selling price of existing homes sold in Alberta rose by a mind boggling 30.8 percent and 24.8 percent respectively.

The trouble is that those kinds of performances are hard to top. In essence, prices there were thus destined to cool off. When they did, they brought the rest of the Canadian averages down with them. The irony is that this all occurred at the same time that average selling prices hit record highs in close to a dozen other markets across the country, including Ottawa, Montreal, Saskatoon, Saint John and Kitchener-Waterloo.

Of course, all of this is not to say that house prices on a national basis will not decline further. In fact, many observers have already said that housing demand growth will taper off for this year as a whole. However, compared to the increases that we have seen in recent years, there are few signs that any impending correction would be more than a minor affair.

Peter Diekmeyer (peter@peterdiekmeyer.com) is Bankrate.ca's economics columnist