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Homes for sale in Toronto's Beach area June 13, 2012.Moe Doiron/The Globe and Mail

For those who have been waiting for the other shoe to fall in Canada's housing-market slowdown, I have news for you: It already has. It just hasn't hit the ground yet.

As sales and construction have slowed dramatically in recent months, home prices managed to resist slumping along with them. This curious phenomenon had the optimists talking about a soft landing for the sector; but the pessimists (realists?) saw this as a Wile E. Coyote-esque illusion, certain that as soon as the market noticed that the ground beneath it had fallen away, it would plunge through the thin air inexplicably holding it aloft.

The latest Teranet-National Bank House Price Index numbers, released Tuesday morning, suggest much of the country has stopped running and looked down.

Admittedly, that's hard to see when you look at the headline number: The nationwide composite index was up 2.0 per cent year-over-year in April, and up 0.2 per cent from March. Doesn't look much like a plummet.

But National Bank Financial economist Marc Pinsonneault noted that the month-over-month price gains in April – historically a pretty strong month relative to March, as the arrival of spring ramps up activity – were the second-weakest in the 15-year history of the index, with only the 2009 recession generating a weaker April performance. On a year-over-year basis, the price increase was also the weakest it has ever been outside the Great Recession.

Indeed, the pace of year-over-year price appreciation has been slowly eroding for the past year and a half. Of the 11 major urban centres tracked by the national composite, seven (Victoria, Vancouver, Edmonton, Toronto, Hamilton, Ottawa-Gatineau, Montreal) now show price declines from their 2012 highs. In April, five of the 11 (Vancouver, Victoria, Ottawa-Gatineau, Quebec City, Halifax) suffered month-over-month price declines. The scales are, increasingly, tipping toward actual deflation in the Canadian housing market – and are already pretty decisively there in some parts of the country, most notably the West Coast.

Mr. Pinsonneault noted that new-listings and sales data point to continued market erosion in several major centres, specifically Vancouver, Victoria, Montreal and Ottawa-Gatineau. "It is therefore likely that the annual price inflation in the Teranet-National Bank composite index will continue to diminish substantially in the months ahead," he concluded.

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