First, it was Canada’s top 25 markets that were feeling the pain from a slowdown in housing prices. Now, it’s clear that the malaise has spread to the entire country.

Two weeks ago, Canadian Real Estate Association figures showed the average sale price of a resale house in the 25 largest markets was down 0.4% in June from a year ago.

New data released yesterday show housing across the country is losing out to inflation. The average sale price of a home in Canada last month was $314,028, a tiny $35 increase from the same month a year ago. For the first six months of the year, prices were up 3.6% from a year ago.

“In essence, Canada’s housing market has pulled back from the record-setting pace of 2007, but in most provinces it continues at or near sales levels set in the years before that,” says Calvin Lindberg, president of CREA. “The increase in housing prices is also pulling back from the record-setting pace of last year, but we have yet to see any of the price contractions that have impacted the housing market in the United States.”

CREA said there is good news in the numbers. For the fifth straight year, more than a quarter of a million units were sold in Canada. However, sales over the first six months of the year are down 13.1% from a year ago.

“Resale housing activity is cooling evenly in rural, suburban and urban markets,” said Greg Klump, CREA’s chief economist.

He said rising fuel prices have not affected the housing market. “There is no statistical evidence to date that shows increases in energy prices are prompting Canadians to relocate. Lifestyle factors remain the prevalent influence on homebuyer preferences.

by Garry Marr, Financial Post