The average price of a home sold in Canada in September was in line with that of a year earlier, even as 19.8 per cent fewer sales were registered.

The downtown Vancouver skyline shows condo development in the city. The average price of a Canadian home sold in September matched that of a year earlier. (Albert Normandin/Associated Press)

The Canadian Real Estate Association said Friday that sales activity was up three per cent over August's level, but almost 20 per cent below the high volumes seen in September 2009.

That month was the best September ever for Canadian home sales, as Canadians rushed to buy in anticipation of interest rates going up, which they did when the Bank of Canada hiked its overnight lending rate in June.

April was the busiest month for home sales this year, and activity in September was 15 per cent below that level. It's expected annual comparisons will pale for the next several months because of the inflated levels seen at the end of 2009.

Nationally, the average price of a Canadian home sold through the Multiple Listing Service was $331,089 during the month. That's in line with the level of September 2009 but slightly ahead of the $324,928 it stood at in August 2010.

"Supply and demand are rebalancing, and that's keeping prices steady in many markets," CREA president George Pahud said.

Sherry Cooper, chief economist at the Bank of Montreal, said back-to-back advances in August and September figures followed an ugly slide in the first seven months of the year that saw sales plunge 30 per cent from peak to trough.

"The Canadian housing market has returned to balance, which still feels like a stark change from the rip-roaring sellers' market seen (earlier this year)," she said in a note.

Inventory decreasing

The number of months of inventory represents the period it would take to sell current inventories at the current rate of sales activity, and measures the balance between housing supply and demand. The seasonally adjusted number of months of inventory stood at 6.6 months at the end of September on a national basis. This is down from 6.9 months in August, and 7.2 months in July.

"Mortgage lending rates eased in the third quarter, which helped support sales activity over the past couple of months," CREA's chief economist Gregory Klump said.

Two-thirds of local markets posted monthly increases in September, led by Winnipeg, Calgary, and Montreal, CREA said. Sales declined in only one province, Nova Scotia.