Home prices up for first time this year on monthly basis

Figures released Wednesday by the Canadian Real Estate Association showed a reverse for the better.

They showed the average price of a Canadian home was $481,500 last month, a rise of 1% in the past year.

CREA said July marked the first time this year that average house prices eked out an annual increase, as the impact of tougher mortgage rules implemented earlier this year is starting to wane.

After years of annual increases that frequently touched the double digits, Canadian house prices have cooled considerably in recent months, especially after the implementation of the new mortgage stress test rules that hold borrowers to higher income standards, which has resulted in less borrowing or taking some people out of the market entirely.

Prices inched higher but July saw the total number of homes sold during the month decline compared to last year, by 1.3%. But after a big plunge at the start of the year, the monthly sales figure has now ticked up for three months in a row.

Average prices barely cleared breakeven on an annual basis for the first time since the start of the year.

But CREA says the average isn't the most accurate way of assessing house prices because it's skewed by activity in big cities like Toronto and Vancouver, and by certain types of housing. So it calculates another number — called the Multiple Listings Service Housing Price Index (MLS HPI) — that is says is a better gauge of the overall market because it strips out all the volatility.

By that measure house prices in Canada have increased slightly in the past year, by 2.1% up to July.