Home sales across Canada in October were up by a seasonally adjusted "modest" increase of 0.9 per cent from September, the Canadian Real Estate Association said Wednesday.

The real estate group said sales activity in October was up from the previous month in about half of all local markets, led by the Greater Toronto Area and the Fraser Valley, along with a number of markets in the Greater Golden Horseshoe region.

"This morning's report corroborates the notion that the Canadian housing market continues to manoeuvre a soft landing," said TD senior economist Michael Dolega.

"After four months of significant declines, which saw activity plummet by 15 per cent, October marked the third consecutive increase in activity nationally," Dolega said in a commentary.

Factoring out seasonality, actual home sales activity nationally in October was off by 4.3 per cent, extending year-over-year declines to seven straight months. CREA said sales were down from year-ago levels in slightly more than half of all local markets, led overwhelmingly by the GTA and nearby cities.

The national average price for homes sold in October 2017 was just under $506,000, up five per cent year-over-year.  CREA said the pricey Vancouver and Toronto markets skew that figures, adding that excluding these two markets from calculations brings the average price down to $383,000.

Inventory reading steady

CREA also said there were five months of inventory on the market on a national basis at the end of October 2017, unchanged from the previous two months and almost on par with the long-term average. Inventory is a measure of how long it would take to liquidate current inventories at the current rate of sales activity.

The number of months of inventory in the Greater Golden Horseshoe region is up sharply to 2.5 months from the all-time low of 0.8 months reached in February and March, CREA said, but added that it remains below the region's longterm average of 3.1 months.

"Newly introduced mortgage regulations mean that starting January 1st, all home buyers applying for a new mortgage will need to pass a stress test to qualify for mortgage financing," said CREA president Andrew Peck said in a release.

"This will likely influence some home buyers to purchase before the stress test comes into effect, especially in Canada's pricier housing markets," Peck said.

Vancouver price bounce

CREA said benchmark home prices in the Lower Mainland of British Columbia have recovered and now stand at new highs, with Greater Vancouver prices up 12.4 per cent year over year, and the Fraser Valley seeing a gain of more than 17 per cent. 

Meanwhile, price gains slowed year-over-year in October in the Greater Toronto, Oakville-Milton and Guelph areas, but prices in those markets remain above where they were 12 months ago. Prices in the GTA were up 9.7 per cent year-over-year, CREA said.

BMO Capital Markets chief economist Doug Porter said the adjustment in the Toronto market is ongoing, but signs of stability have emerged, especially in the condo sector.

"The big question now is: How does the market respond to the one-two punch from prior Bank of Canada rate hikes and the coming rule changes from OSFI in the New Year?" Porter wrote in a commentary.

"On balance, we continue to look for sales to dip three per cent next year and price gains to moderate significantly to around a one to two per cent average from the heated double-digits average gains of 2017," he said.