Residential housing prices in Canada dropped about 2 per cent, adjusted for inflation, in the second quarter of this year, compared with the same period last year, Scotiabank reports. The results are summarized in the bank’s Global Real Estate Trends publication, released Sept. 14.

The bank says that housing demand “has been tempered by a slower pace of job growth and the cumulative effects of tighter mortgage insurance rules over the past several years, while more balanced supply conditions in most parts of the country have restrained price increases. The latest mortgage rule changes, including a reduction in the maximum amortization period from 30 years to 25, which took effect in early July, are expected to lead to a further moderation in sales volumes and average prices through the fall.”

The report says that, nevertheless, Canadian house prices have performed better than those of many countries.

The U.S. housing market is showing increasing signs of recovery, the bank says. “Average inflation-adjusted home prices rose 3 per cent year over year in the second quarter, moving the U.S. from its persistent position at the low end of our international survey toward the top. This modest improvement follows steady price declines from 2006-2011 that saw average real prices drop a cumulative 35 per cent from their peak.”