For the first time in 2.5 years, Canada Mortgage and Housing Corporation has rated the housing market as only moderately vulnerable, indicating the hot conditions characterized by bidding wars and sky-high prices may be cooling off a little.

In its quarterly Housing Market Assessment, CMHC found that inflation-adjusted average price fell by 5.4 per cent in the fourth quarter of 2018 compared to the same period in 2017.

In its latest report, the Canadian Real Estate Association said the average price of a home sold in Canada during March was $481,745.

CMHC measures vulnerability to identify imbalances in the housing market that could result in dramatic corrections where consumers lose money. The object is to provide the public with information they can use to try to avoid buying at the peak of a bubble, for instance.

Four times per year, the housing corporation rates 15 metropolitan areas in Canada on four measures:

Overheating.

Price acceleration.

Overvaluation.

Overbuilding.

For each area, it assigns a grade of high, moderate or low vulnerability.

It also evaluates Canada's housing market as a whole, including the vast area outside of the 15 main cities.

Report seen as good consumer news

High-demand markets in Vancouver, Victoria, Toronto and Hamilton continue to receive grades of high vulnerability overall. Notably, though, in Vancouver — Canada's most expensive housing market — overvaluation eased from high to moderate, and overheating from moderate to low.

In Toronto, while the housing corporation warns that overheating, price acceleration and overvaluation continue to be of some concern, overvaluation is continuing to ease. There's little sign of overbuilding in the city, however, with Toronto receiving a score of low vulnerability on that front.

What we want is a soft landing rather than a crash landing. This is why this is the outcome we are looking for. - Patrick Perrier, deputy chief economist

Patrick Perrier, deputy chief economist, said the report is good news for Canadians.

After a long period of high vulnerability on all four markers, Canadian real estate is "now showing signs of softening, so in fact that's a good thing for the housing market."

"Housing markets are trending toward more balances, so we don't see that as an issue. In fact, that's a desired outcome," he said.

"What we want is a soft landing rather than a crash landing. This is why this is the outcome we are looking for."