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An open house sign is seen in front of a home listed for sale in Vancouver, B.C.Darryl Dyck

Canadian home prices reached a new peak in April, but growth is slowing.

The Teranet-National Bank house price index rose 0.2 per cent in April from a month earlier and stood 4.4 per cent higher than the same time last year, a notable slowdown from March, when prices rose 4.7 per cent for the year.

It was the weakest April price gain since the index began tracking prices 17 years ago, outside of the 2009 recession. The national numbers were driven largely by fierce competition for single-family homes in Toronto and Vancouver, which make up roughly half the national average.

But in nine of the 11 cities that make up the index, prices are still below their peak levels, and "a price correction … is under way," in eight markets across Canada, wrote National Bank senior economist Marc Pinsonneault.

"It remains that the big picture is not one of generalized strength, despite the stimulus provided by historically low mortgage rates," he wrote. "Since current conditions in the Toronto and Vancouver resale markets remain rather tight, these two metropolitan areas should continue to pull up the national [prices] in the coming months, but weakness in other regions should limit home price growth at the national level."

Even Toronto and Vancouver appear to be running out of some steam. Average home prices jumped 10 per cent for the year in April in Toronto, the Toronto Real Estate Board reported. But the average was skewed by rising sales of more expensive detached homes. The Teranet-National Bank index which measures only repeat sales of the same property, found that prices in Toronto were essentially flat in April, compared to a month earlier, although they were up 7.6 per cent compared to the same time last year.

It was a similar picture in Vancouver, where benchmark prices were 4.8 per cent higher in April than a year earlier, but essentially unchanged compared to March.

Prices fell for the month in Ottawa-Gatineau, Victoria and Hamilton. Halifax, Quebec City, Montreal and Winnipeg have all also seen price declines in the past few months, though April marked a slight rebound.

Home prices have also fallen nearly 2 per cent over the past six months in Calgary, although they ticked up slightly for the month in April. Prices were still 3 per cent higher than they were a year ago.

So far, Edmonton has been proving the exception to Alberta's slumping real estate market, with prices up 4.7 per cent for the year, hitting their highest level since January 2008. Prices were still below their pre-recession peak in the city.

Ottawa's housing market has been the hardest hit over the past year, with prices falling more than 6 per cent over the past eight months on the back of a glut of new housing supply and the federal government belt-tightening, along with the uncertainty that comes with an election year. The capital city was the only market to see an outright price decline over the past 12 months, with prices 2.3 per cent lower than they were last April.

Nationally, home prices should grow by 5 to 6 per cent this year, mainly driven by rising prices in Toronto and Vancouver, wrote Toronto-Dominion Bank economist Diana Petramala. With economists expecting interest rates to increase sometimes next year, and bond yields already on the rise, buyers could be looking to jump into the market before mortgage rates rise.

"We continue to count on a slowing in home price growth, but likely not until we see sustained higher interest rates," Ms. Petramala wrote. "More strength now will likely mean the impact of higher interest rates will be larger when they do eventually come."

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