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Canada’s widely-watched Teranet-National Bank House Price Index rose 0.7 percent in June over the previous month, an increase that National Bank economist Marc Pinsonneault called the “lowest June advance in 17 years.”

The index, which tracks Canadian home price trends by using a repeat sales methodology, had long been expected to show signs that it had been impacted by the COVID-19 pandemic. The repeat sales methodology works by tracking changes in price between the two most recent sales of the same property.

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The index’s May data showed early signs of a pandemic-induced home price appreciation slowdown, which was subsequently confirmed by the latest reading from June, published by Teranet and National Bank of Canada this week.

The rate of appreciation seen last month, at 0.7 percent, was essentially halved when compared to the average Canadian home price increase observed by the index in June over a 10-year period.

“Other signs confirm the slowing of the market,” wrote Pinsonneault. “[I]n the wake of actions to stem the spread of COVID-19, the number of repeat sales entering into the index was down 24 percent from June 2019, a second straight large drop from a year earlier.”

Teranet-National Bank House Price Index is known to lag behind other widely used home price tracking tools, such as monthly average home sale prices published by the Canadian Real Estate Association and other local real estate boards. This is because the index uses prices entered into public land registries in the Canadian markets it tracks. These often are slower to respond to market changes because sale price data is not entered into land registries as quickly as it’s entered into the MLS systems used by real estate boards.

When Pinsonneault noted the 24 percent drop in repeat sales entered into the index, he’s referencing a substantial and sustained decline in home sales through this period as a result of pandemic-related business shutdowns and social distancing measures.

On a local level, Toronto saw a 0.8 percent index price increase in June compared to the previous month while Vancouver saw a marginal 0.2 percent month-over-month bump. On an annual basis, Toronto saw a 9.8 percent increase while Vancouver recorded a 1.1 percent rise.

On the national level, Canadian home prices were up 5.9 percent from a year earlier, which Pinsonneault identified as a deceleration in annual price growth after 10 months of accelerating growth.

In a note to clients, Capital Economics’ Stephen Brown interpreted the latest index reading as a show of “resiliency” for the Canadian housing market.

“The Teranet index uses a three-month average to reduce volatility, so the June data essentially cover developments over April, May and June,” wrote Brown.

“Those should have been the weakest months for the housing market given the lockdowns, so it is an encouraging development that prices nevertheless inched up,” he continued.

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