Home sales edged higher in Dec.

(QMI Agency)

(QMI Agency)


, Last Updated: 10:48 AM ET

TORONTO - Sales of existing homes in Canada rose slightly in December from November, while the number of newly listed properties also increased, suggesting low borrowing costs continued to support the housing market and offset the drag of a slowing economy.

The Canadian Real Estate Association (CREA) said 39,740 homes changed hands last month, up 1.8% from a month earlier and 4.6% from December 2010. The number of listings rose 3% from November.

The average sale price was $358,480 on a seasonally adjusted basis. This was down 0.9% from November but up 0.9% from the year before.

“Momentum for national sales activity and average price remains positive but is slowing, which suggests that the continuation of low interest rates is not causing the Canadian housing market to overheat,” Gregory Klump, chief economist for the industry group, said in a statement.

“High end home sales seem unlikely to spike again in the first quarter like they did at the beginning of 2011, so national average price momentum may wane further over the next few months.”

Klump said low interest rates should continue to support home sales in 2012.

The report follows data earlier this month that showed Canadian housing starts climbed more than expected in December, fuelled by low mortgage rates and a boom in condo construction, even as analysts predicted the once-hot sector would cool further in 2012.

Canada’s housing sector, which did not experience the subprime mortgage boom and bust seen in the United States, played a key role in lifting the economy out of recession as ultra-low interest rates drove sales and prices higher.

Canadian policymakers have voiced fears the market’s post-recession boom, combined with a long run of low lending rates, could create a fresh asset bubble.

CREA said sales totalled more than 456,000 last year, up 2.2% from 2010.

(Reporting by Jeffrey Hodgson)