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A for-sale sign is seen in Toronto’s East End in this file photo.Deborah Baic/The Globe and Mail

Three consecutive months of mild declines suggest that Canada's housing market is slowly losing momentum, leading some observers to predict the soft landing that policy makers have been hoping for.

The number of homes changing hands continues to run higher than many economists expected, and prices even more so. That's driven by the comeback of cities that slumped the deepest in 2012, such as Vancouver and Toronto.

Sales remain strong, with December levels at 12.9 per cent above those of a year earlier, according to data released Wednesday by the Canadian Real Estate Association, which represents a majority of real estate agents in Canada.

But on a month-to-month basis, about 60 per cent of the Canadian markets saw a decline in sales from November. National sales slipped 1.8 per cent in December, the third consecutive monthly fall.

The modest slowdown since September is welcomed by many economists and policy makers who worry about overvaluation. Royal Bank of Canada economist Robert Hogue called it a "healthy development."

December's figures bring an end to a year that saw national sales rise 0.8 per cent, to 457,893 existing homes. That's a sharp contrast from the dire forecasts that the market would have a huge slump in 2013 in the wake of Ottawa's tightening of mortgage insurance rules in July 2012.

Toronto-Dominion Bank economist Diana Petramala notes that the markets that are currently experiencing the greatest price increases also have record numbers of new homes under construction. It remains to be seen what impact the abundance of condos being built in cities like Toronto will have on prices.

"While price growth has accelerated in the past six months (particularly in Vancouver and Toronto), upward drifting interest rates and balanced conditions should contain the gains this year," said Bank of Montreal economist Robert Kavcic.

There was much speculation in the fall that the high number of national sales in August and September were stealing future sales, as prospective buyers rushed into the market, either because they feared that mortgage rates would rise further or to take advantage of rates they had locked in during the summer. That appears to be largely true.

The average price of homes that sold over the Multiple Listing Service in December, meanwhile, was up by 10.4 per cent from a year earlier to $389,119.

The MLS Home Price Index, which attempts to create a more apples-to-apples national comparison, was up 4.3 per cent. That's still strong, and marks a slight acceleration in price growth from the 4.11-per-cent annual gain in November.

The latest numbers indicate Mr. Flaherty's attempt to head off a bubble may have paid off, despite the fact his measures frustrated some.

Adam Chiasson, a 32-year-old Calgarian, for example, was finally able to move into his first house last month, having been put off by those changes.

"My down-payment wasn't really there at that point, so it kind of pissed me off for a little bit because it meant I had to save more," he said. "That pushed things back a little bit."

He went on to save up enough for a 20-per cent down-payment on a house worth more than $300,000, making him eligible to buy without mortgage insurance.

Calgary's sales were up 9 per cent from a year earlier. Mr. Chiasson says the house he bought was only on the market for about a day and a half.

Not all markets have fared well. Ottawa saw a 2.1-per-cent decline in sales from a year earlier, a phenomenon that local players say is largely related to government layoffs, which have been impacting the market for some time.

"I think we've been a little spoiled in the last five or seven years where you put a house on the market and expect it to be sold in a couple weeks," says Ottawa Re/Max agent Jeff Miller, who notes that houses have been taking closer to 50 days to sell in the last couple of months.

Kevin Williamson, a construction worker in Ottawa, listed his home about seven months ago. He and his wife wanted to move their seven kids, and the home daycare she runs, closer to schools.

"We didn't really have an offer until about six weeks ago," he said Wednesday, as he sat in the moving truck 'finally taking him to a new home. "We had listed at what we thought we'd get and we ended up dropping the price two or three times. But we didn't really mind, because everyone else was dropping their prices too."

Al Demings, a Re/Max agent in the Halifax-Dartmouth area, where sales fell 16.9 per cent last year, cited the differences across the country.

"The changes to the mortgage regulations that were made in order to stop what they thought was going to be a potential bursting of the bubble in Ontario and out west has had a pretty significant impact here, it limited our first-time buyers and that has a ripple effect," he said.

Mr. Demings is now letting himself hope that things are turning around. "I'm not sure if it's that we've finally got a nice couple of days here almost like summer, but we've had a higher turnout to open houses than we've had in months," he said Wednesday.

At the national level, economists are now expecting both sales and prices to tick up a small amount this year. Royal Bank's Mr. Hogue is calling for a 0.6-per-cent rise in sales and a 1.5-per-cent gain in prices.

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