The average price of a Canadian home sold in January increased by 17 per cent to $470,297 compared to the same month a year ago.

Home sales were higher during the month, but prices truly soared, the Canadian Real Estate Association reported Tuesday.

As has been the case for several years, however, two large and hot markets, in Toronto and Vancouver, skewed the national average higher.

Strip the two cities out of the numbers and the average Canadian home was worth $338,392 last month while the year-over-year gain drops to eight per cent.

If B.C. and Ontario were stripped out, the picture would look even bleaker — the average price of a Canadian home would have dropped by 0.3 per cent in January to $286,911.

"While we continue to believe that things just can't any hotter, markets in B.C. and Ontario continue to prove us wrong," TD economist Diana Petramala said, adding that for Toronto and Vancouver, "every month of double-digit home price growth raises the risk of a deeper home price correction down the road."

Despite the eye-popping price gains on a national level, there are signs of tightening in the market locally.

On an annualized basis, prices declined in January in four provinces, including Alberta, Saskatchewan, Nova Scotia and Newfoundland and Labrador.

The average price gain across Canada's 26 largest cities was 4.7 per cent in January; the strongest was 31 per cent in Vancouver; the weakest was –10 per cent, in Newfoundland and Labrador, which is considered one single market and thus compared to other cities.

Fewer listings

The latest poster child for Vancouver real estate excess is off the market, having fetched — of course — more than the asking price 2:14 Housing market watchers keep an eye on a number known as inventory, which is a proxy for whether there's enough homes for sale to keep up with demand. It's expressed in terms of months of supply, which means the inventory figure is the amount of time it would take to sell every home on the market at the current pace of sales.

For January, the inventory figure dropped to 5.3 months, its lowest level in more than six years.

"If listings … were not in such short supply, January sales activity would likely have reached even greater heights," CREA president Pauline Aunger said. "Meanwhile, other major urban housing markets have an ample supply of listings, particularly where some homebuyers have become increasingly cautious amid an uncertain job market outlook."

That''s even the case in hot markets, where homes are snapped up in record time.

"Vancouver's market is drum tight, with an almost unheard of 91 per cent sales-to-new listings ratio," BMO economist Robert Kavcic said. "In other words, almost every new listing is getting absorbed within the month as record sales meet average growth in new listings."