On Wednesday, Statistics Canada reported that Contractors' selling prices for new homes decreased by 0.6 per cent between December and January.

The largest decreases were noticed in the cities of Western Canada. The rate of decrease in January was somewhat faster than the 0.1 per cent drop registered in the preceding month. At that time the prices dropped 2.8 per cent in Edmonton, 2.1 per cent in Calgary, 1.1 per cent in Victoria and 0.7 per cent in Vancouver.

Statistics Canada said that there was a drop of 0.8 percent in new housing price index in January, as compared with the same month in 2008, which was the first year-over-year decrease in Canada since January 1997.

Gary Friend, president of the Canadian Home Builders' Association is of opinion that last year, when oil and gas prices tanked and economic activity started to dawdle in Alberta, the builders had realized that there was "a correction" coming in the housing market.

Valerie Poulin, a Conference Board economist is of opinion that "Years of frenzied construction activity had left the market overdue for a correction."