A major Canadian housing price index continued to rise in July, but one economist warns that the jump in prices isn’t necessarily a good sign for the market.

The Teranet-National Bank Composite Price Index rose 0.8% in July, following a 1% rise in June.

“The Composite index rose in July for a fourth month in a row, but these rises were all below the historical average for these months,” writes National Bank senior economist Marc Pinsonneault, in a note.

Pinsonneault adds that, after seasonal adjustment, the index was flat in July, after a drop in June.

“The same phenomenon applied to the Toronto index…where the adjusted index declined over the last four months,” he writes.

The adjusted index also declined over the last two months in Vancouver, reflecting a general flattening of prices.

“This means that the recent rises in these indices reflected only seasonal pressures, not an underlying trend,” writes Pinsonneault.

The seasonally adjusted declines can be attributed in large part to a drop in demand for low-rise homes, while demand for lower-priced condos remains strong. The condo index rose a seasonally adjusted 1.6% month-over-month in July.

“These numbers are consistent with market conditions, tighter for condos than for other housing,” adds Pinsonneault.

A Rise in This Canadian Housing Price Index Doesn’t Mean Prices Are Rebounding by Sarah Niedoba | Livabl