Home prices in Canada declined for the fifth straight month in January, according to the Teranet-National Bank House Price Index. Prices were down 0.3 per cent over the 11-city composite index.

Home prices declined in seven of 11 major Canadian markets from December, according to the widely followed index. Victoria, Halifax, Quebec City and Ottawa saw prices rise.

Prices rose 2.7 per cent from a year earlier, but that was the lowest annual growth rate since late 2009 as the housing market continues to cool.

January was the 14th straight month where the annual price increase was smaller than the month before, according to the Teranet-National Bank analysis.

Only Vancouver has seen an annual decline in home prices, falling 2.5 per cent from January 2012.

In Toronto, where many analysts are calling for a slowdown, prices were up 5.3 per cent annually.

Starting to cool

Many analysts are calling on Canadian home sales to continue to cool, especially in the red-hot Toronto and Vancouver markets.

"We anticipate a further softening in both sales and pricing in 2013," Scotiabank economist Adrienne Warren said in a note to investors. But she expects the correction to be mild, with low interest rates and job growth preventing a sharper correction.

The federal government has taken steps over the past couple years to avoid a bubble and cool the housing market by tightening mortgage rules.

The Canadian Real Estate Association found that sales activity dropped by 5.2 per cent in January compared to a year ago, which they attributed to the tighter rules.

Bank of Canada governor Mark Carney welcomed the cooling market, saying it's all part of the Canadian economy's transition from one dependent on borrowing to one more reliant on strong exports.