Anyone looking for Canada's surging real estate market to cool off will have to wait a little while longer, as more price and sales records were broken last month.

The price of an average resale home in Canada's major markets hit $333,524 in May, according to Multiple Listing Service figures from the Canadian Real Estate Association (CREA).

That's a jump of almost $10,000 from April and represents an increase of 10.2 per cent from the same month last year.

New price records were set in 11 markets — Vancouver, Calgary, Edmonton, Regina, Saskatoon, Toronto, London and St. Thomas, Hamilton-Burlington, Montreal, Quebec City and Halifax-Dartmouth.

The biggest percentage gains continued to be primarily in western cities. Edmonton's year-over-year price appreciation of 47.3 per cent leads all cities. Saskatoon's price gain of 44.1 per cent wasn't far behind. 

In terms of price, Vancouver's average was still the leader, at $591,722, up $27,000 in just one month and up 14.2 per cent from May 2006. Calgary was second, with an average price of $429,298. That's up $9,000 from April's average and is 19.8 per cent above levels of a year ago. Toronto was third overall, with an average resale price of $382,689, up 4.7 per cent from May 2006.

Mortgage rates hit 5-year high

News of higher home prices comes on the heels of a series of mortgage rate hikes in the last month that have taken a five-year closed mortgage to 7.44 per cent as of Friday — a five-year high.

With mortgage rates rising, the real estate association predicts that price increases in the second half of the year will slow to single-digit growth. It forecasts that the annual average price will rise by 9.5 per cent in 2007 and 5.5 per cent in 2008.

Many observers foresee similar cooling, as affordability suffers from the double whammy of rising mortgage rates and rising prices. But few see a crash as income growth remains strong and consumers feel confident.

Sales at record high

CREA said sales activity hit a new high in May, when 42,039 units were sold. It's the first time that sales in Canada's major markets topped 40,000 in a month.  

"Activity broke all previous records in the first quarter, and gained momentum in the second quarter," CREA chief economist Gregory Klump said in a statement.

"The increase in transactions for the year to date suggests activity is on track to set a new annual record this year."

The healthy housing market in Canada stands in contrast to the situation south of the border, where U.S. home prices and sales are falling in many parts of the country, and mortgage foreclosures are running 62 per cent above rates of a year ago.