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Calgary’s housing market remains a buyer’s market thanks to Alberta’s ongoing economic recovery, according to the Canadian Mortgage and Housing Corporation (CMHC). But a slowdown in new homes and higher demand for condos is helping temper high inventory levels.

On Thursday, the CMHC released its quarterly housing market assessments for Canada and 15 cities across the country.

Nation-wide, Canada’s real estate market has come out of 10 consecutive quarters of being highly vulnerable. That two-and-a-half-year run of high vulnerability was due to a combination of overheating, price acceleration and overvaluation in major cities in B.C. and Ontario, and overbuilding in the Prairies.

Calgary remains at a moderate degree of housing vulnerability, largely due to overbuilding. And despite new home builders “generally slowing down production,” the CMHC said new home sales are dropping at a faster rate than the slowing production.

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“What we’ve seen across the market is there have been some affordability challenges which are linked back to the slow economic recovery across Calgary,” said CMHC senior analyst James Cuddy.

Apartment condominiums are the exception to the high inventory levels in the southern Alberta city.

“The buyers that are out there are seeking more affordable options, which tend to be apartment condos,” Cuddy told Global News. Tweet This

“We have both sides of the equation interacting to bring down (apartment) inventories. We have production levels slowing down and moving more in line with demand, and demand is picking up for the more affordable options in the market, which is bringing down inventories for that segment.”

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The continued high number of homes for sale and slow economic recovery in Calgary is leading to continued downward pressure on prices in both the new and resale markets.

“When we have this disconnect between supply and demand, it puts downward pressure on prices,” Cuddy said.

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“The (housing market assessment) is looking at new housing in terms of these inventories, but the same story goes for the resale market. There are a lot of listings in the resale markets, while the demand isn’t necessarily at the same levels, so this is contributing to lower price growth over time.”

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Cuddy said the mortgage stress test — designed to target over-leveraged house buyers — has impacted some buyers.

“Whether or not it means they simply shifted to a lower price point or if they had to rent for longer, that could have impacted demand,” Cuddy said. Tweet This

“The challenge is it’s difficult to tease out these effects at the local level, especially in an environment when there are so many other things going on that are arguably more important, such as the economic fundamentals in the market like high unemployment rates, lack of growth in personal disposable income and high interest rates.”