A new price index gets around the apples-to-oranges comparison and shows by how much CREA statistics miss the mark. The repeat-sale price index (RSPI), developed by Teranet Inc. and National Bank, says house prices are still above the level of a year ago (by 3.3%). For more detail on the RSPI, see the website maintained by Teranet Inc. and National Bank (also shows price changes at the city level).

The RSPI approach is what’s used in the U.S. for the S&P/Case-Shiller and the Office of Federal Housing Enterprise Oversight (OFHEO) indexes. And now that Canada has the same approach, comparisons with the U.S. are more valid (the S&P/Case-Shiller index is down almost 20% year-over-year, showing how much worse things are in the U.S. at present).

Why does CREA data show such a big drop in Canada? House sales have dropped off considerably in the high-priced province of B.C. The result is a lower average price for houses. But this is not a price decline: it’s a change in the mix of houses sold. CREA has undertaken to adjust its data, but the RSPI will remain the less biased measure and should be heard from a lot more in the future.