There were signs of stabilization in the housing market as prices continued to climb in January, while total sales fell from a year before, according to the Canadian Real Estate Association.

The average national sale price of a home rose two per cent from January 2012 to $354,754 last month, while the number of homes sold in January declined 5.2 per cent from a year earlier. CREA says that's due to tighter mortgage rules that came into effect midway through last year.

Sales rose 1.3 per cent from December to January.

"National sales activity continues to hold fairly steady at the lower levels first reached when mortgage rules were tightened," CREA president Wayne Moen said in a release.

Sign of stabilization

Friday's release showed signs the housing market is stabilizing following the new mortgage rules, according to TD economist Diana Petramala.

"Existing home prices have remained surprisingly stable over the past year, as listings have fallen along with sales."

However, Petramala says the housing market will continue to cool, with a moderate decline over the next few years as more listings and fewer sales push prices lower.

Looking past the national average shows strength in some regional markets and weakness in others.

"As always, all real estate is local," Moen said.

Sales fell in about two-thirds of local markets, with notable exceptions in Calgary, Edmonton and Winnipeg.

Prices in Calgary rose eight per cent over the year, according to the association's home price index, while prices in Regina were up 8.8 per cent.

The rapidly cooling housing market in Vancouver has had what CREA calls a "gravitational" effect on national averages. Excluding sales in the Greater Vancouver area, the average home price increased 3.3 per cent.

Prices dropped by 2.8 per cent in Vancouver, according to the association's home price index.

Concern growing

There is growing concern among many observers and economists that the Canadian housing market is making the country more susceptible to global economic shocks.

In a report Thursday, the International Monetary Fund says that on average, home prices in Canada — especially Ontario and Quebec— are 10 to 15 per cent higher than where the fundamentals suggest they should be.

Rating agency Moody's downgraded six Canadian banks last month, specifically saying "elevated housing prices leave Canadian banks more vulnerable in the past to downside risks the Canadian economy faces."