The housing resale market retreated in January following a strong finish to 2011 in December, according to the Canadian Real Estate Association. Existing home sales in Canada fell by 4.5 per cent in January from the previous month, according to a report released Wednesday by Canada's largest real estate organization.

"This month's decline is reflective of what will shape up to be a softer year in sales," said Jacques Marcil, senior economist at TD Bank, adding that "the actual correction is foreseen to start in 2013, with both resales and prices turning negative."

However, sales activity was up by 4 per cent from a year earlier, and "stood even with the 5 and 10 year averages for January sales", according to the report.

The average resale price rose by 1.2 per cent from a year earlier to $348,178, ranking among the lowest increases since late 2010.

Sherry Cooper, chief economist at BMO Financial Group, called the lower home sales a sign of a "welcome moderation" in the housing market, adding that even the cities with the hottest housing markets are "simmering down".

While many had been "wringing their hands in anguish" over a possible housing bubble, Cooper added, "The facts on the ground send a much calmer message."