Statistics Canada reported Tuesday that its New Housing Price Index increased 0.2 per cent in September after a 0.1 per cent increase in August.

The federal agency said Montreal led the increase with a 1.6 per cent rise, and Calgary followed with a 0.3 per cent gain.

Prices for new housing remained unchanged in eight of 21 cities. (CBC)

The increases in the two cities were due in part to builders moving to new areas with higher land development fees, StatsCan said.

Those higher fees "skewed the overall number," said Bank of Montreal economist Robert Kavcic.

"If you look beyond the headline, it still shows that Canadian house price momentum has slowed."

Prices remained unchanged in eight of 21 cities.

Prices declined by 0.4 per cent in both Vancouver and Victoria and edged down 0.1 per cent in Hamilton.

The index was up by 2.7 per cent compared with September 2009, with Toronto and Oshawa, Montreal and Vancouver, the main contributors to the increase.

Bank of Canada governor Mark Carney has repeatedly warned Canadians that homes may be overvalued and that a drop in prices could be sharper than expected.

If that happens, he said, it would exacerbate growing debt burdens that many households are facing.

With files from The Canadian Press