OTTAWA — Home resales in Canada fell in February from the previous month, with the biggest drop recorded in Vancouver, the Canadian Real Estate Association said Monday.

The February declined in Vancouver was offset by "an equally large gain" in Toronto, CREA said.

The industry group said 42,799 units sold on a seasonally adjusted basis in February, down 1.5 per cent from the previous month, reflecting how "national sales activity has slowed while new listings continue to rise, resulting in a more balanced national resale housing market."

Meanwhile, the average resales price of homes rose 18.2 per cent in February from a year earlier to $335,655, it said.

"The Olympic Winter Games may have impacted February sales activity in British Columbia, so activity for the province in March will be closely watched," said CREA president Dale Ripplinger.

"Activity is expected to remain elevated in Ontario and British Columbia over the first half of the year, with buyers looking to beat the introduction of the HST (harmonized sales tax) and expected interest rate hikes."

Millan Mulraine, economics strategist at TD Securities, said the moderating trend seen in the first two months of 2010 will be "briefly reversed over the next two months as homebuyers affected by the recent changes in Canadian mortgage rules attempt to get ahead of the April deadline."

"After this, we should see the Canadian housing market move slowly back into a balanced-market position as higher mortgage rates and prices begin to temper demand. "