In yet another sign that the Canadian housing market is cooling off in the final quarter of 2018, a national house price index dropped for the second month in a row in November.

The Teranet-National Bank Composite National House Price Index fell 0.3 percent last month, following a 0.4 percent drop in October.

“Home price weakness in some major metropolitan areas is evidenced by a second consecutive decline in the national Composite Index,” writes Marc Pinsonneault, a senior economist with the National Bank, in his most recent analysis.

The index tracks home prices in 11 of Canada’s largest housing markets. According to Pinsonneault, stricter mortgage qualification rules and higher interest rates have “cooled demand significantly” in almost every market.

“For instance, in Vancouver, November was a fourth month in a row without a rise in home prices, for a cumulative drop of 1.8 percent,” he writes. “In Toronto, prices declined over the last three months, for a total loss of 0.4 percent.”

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The high price tags of both markets, combined with higher mortgage rates and a difficult-to-pass mortgage stress test, have left many buyers on the sidelines.

But it’s also a bleak picture for typically more affordable cities, including those in the generally cooler Alberta market.

“Prices did not rise for a fifth month in a row in Calgary, and for a third consecutive month in Edmonton, for cumulative declines of 1.4 percent and 1.3 percent respectively,” writes Pinsonneault.

The one remaining area of strength is Montreal, which continues to see sales hit record levels, boosted by strong job growth and relatively affordable home prices. And, Pinsonneault notes that there is still hope for the national market in the new year, given that the Bank of Canada may wait til the spring to hike the overnight rate.

“With interest rates set to rise more slowly than previously thought, hopes for a soft landing of the Canadian home resale market are still warranted,” he writes.

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