Canada's booming housing market may be topping out ahead of the key spring home buying season as price increases are slowing even in the country's hottest areas, according to the country's largest real estate organization.

The Canadian Real Estate Association says a survey of five major housing markets showed prices continued to rise in February, but the rate of increases was down.

Gregory Klump, CREA's chief economist, said the slowdown in increases was due in part to a tightening of mortgage rules and simple affordability for homebuyers.

"The compound effect of previous changes are working to slow the market and certainly prevent the market from forming a bubble," he said.

"Year-over-year price gains have been shrinking and that continued in February."

The 5.1 per cent year-over-year increase in February was the smallest since June 2011, according to the association.

The largest year-over-year increase in CREA's Multiple Listing Service Housing Price Index was in Toronto at 7.3 per cent followed by Vancouver at six per cent, but Klump said even the country's hottest markets showed signs of fading.

In Vancouver, Klump said that in addition to a slowing in price gains, sales are also slowing.

"Prices continue to rise but the sales are trending lower, so on balance when you take all the trends into account it does appear as if the market is beginning to form a top," he said.

TD Bank chief economist Craig Alexander said the smaller price increases was good news for the Canadian economy.

"I think for this year we're going to see the market continue to cool and I think the average for the year nationally will be a gain in the two to three per cent range," he said.

Alexander said he believed there was some overvaluation in the Canadian real estate market, but that was not as overvalued as some fear.

"There are some groups that are predicting quite a dramatic decline in home prices over the next couple of years," he said.

"It is actually encouraging that we're seeing price growth slow because if income growth picks up, then it gives us the scope to actually unwind some of the overvaluation that's out there."

The Bank of Canada has said that household debt is the "biggest domestic risk" to the economy.

Statistics Canada reported last week that household credit market debt, which includes credit cards, mortgages and loans, rose in the fourth quarter, though the pace of borrowing slowed.

Credit market debt-to-personal disposable income in Canada backed off to 150.6 per cent from 151.9 per cent in the quarter as gains in income outpaced debts.

Alexander has suggested Finance Minister Jim Flaherty should intervene again to further reduce the risk and recommended several options for the minister, including reducing the maximum amortization on mortgages to 25 years from 30 or hiking the minimum down payment to seven per cent from five.

He has also suggested a minimum interest rate for banks to use when qualifying potential homebuyers as another possibility.

Broken down by category, price gains slowed in all housing categories tracked except for two-storey, single-family homes.

The aggregate composite MLS HPI rose 1.1 on a month-over-month basis in February, with prices for two-storey, single-family homes up 1.6 per cent. Prices for townhouse/row and apartment units saw smaller gains of 0.4 and 0.5 per cent respectively.

The index based on single-family, townhouse/row unit, and apartment unit sales activity in Greater Vancouver, the Fraser Valley, Calgary, Greater Montreal and Greater Toronto.