Canadian home sales dipped for a second straight month in July, down 0.4% on a seasonally-adjusted basis, leaving sales up a modest 3.4% y/y-but that is still well above the 10-year average. New listings inched up in the month which pulled the sales-to-new listings ratio down slightly, but this measure of market balance is still very close to long-run norms. The months' supply of homes on the market held steady at 5.6 for a third straight month, which is bang on the 10-year average. In other words, the national housing market balance in Canada look balanced. Average home prices were up a hefty 8.9% y/y in July, but that is flattered by strong sales gains in pricey Vancouver and Toronto markets.

"The reality is that, outside of those two markets, price trends are very well distributed and contained overall. Note that of the 26 markets covered, 7 are seeing average prices below year-ago levels and 6 are up in the 0%-to-4% range, leaving the median city's price gain at just under 4% y/y. The more representative MLS HPI was up 5.9% y/y in the month, accelerating for a fourth straight month to the fastest pace in five years", notes BMO Economics.

Vancouver and Toronto continue to drive any positive headline momentum in Canada. Vancouver sales were up a towering 29.8% y/y in July, and tight supply has helped accelerate the HPI to an 11.2% y/y pace, the strongest since the very early days of the recovery in 2010. The detached market is leading the way, but condo prices are accelerating too. Toronto, sales were up a more modest 7.4% y/y and conditions continue to shift in favour of sellers. Single-family prices (+11% y/y) continue to strongly outperform condos (+3.9% y/y), largely due to starkly different supply conditions-condo price growth in Toronto has been range bound for about two years.

As an aside, it's not entirely clear which bandwagon is now more crowded in Toronto-baseball fans or housing skeptics. CMHC joined the latter crowd yesterday, and while we won't question their sophisticated analytics, it was a bit curious that the latest assessment deemed Toronto a high risk market, while there was seemingly nothing going on in Vancouver. For the record, both Vancouver's sales-to-new listings ratio and home price growth are higher and accelerating faster than in Toronto, and a number of the factors justifying Vancouver's rating (i.e., growing population, limited land supply and repeat buyers with equity) could easily be pasted into Toronto's box.

Across the rest of the country, it was a fifty-fifty split between cities posting sales above and below year-ago levels in July, again highlighting the varying nature of housing market performance across the country. The prairies continue to face the toughest conditions in the wake of lower oil prices. Calgary, Edmonton, Saskatoon and Regina are all seeing sales below a year ago, though Calgary and Edmonton continue to recover from the initial shock earlier this year. And, Calgary home prices are effectively flat lining, not correcting more sharply as some feared-stay tuned though with WTI oil prices testing the low-$40 range.

Montreal has seen conditions stabilize, with the market balance improving somewhat from last year's weakest levels, though it is still quite loose. And make no mistake with home prices grinding up just 1.7% y/y, the city is nowhere near the same neighbourhood of Vancouver and Toronto. Atlantic Canada remains challenged by sluggish economic growth and tough demographics, leaving home prices across most of the region little-changed in recent years-Newfoundland & Labrador prices are now correcting

(-6.7% y/y for average prices) alongside the drop in oil. Honorable mention goes to the smaller cities around/outside the GTA, with sales and prices in Hamilton-Burlington and Guelph, for example, rising to record levels this year.

"The big picture remains little changed in Canada's housing market, with strong gains in Vancouver and Toronto contrasting with much softer or more balanced markets across pretty well the rest of the country", says BMO Economics.