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UPDATE 1-Canada new home prices increase by 0.2 percent in August

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OTTAWA, Oct 11 (Reuters) - Prices of new homes in Canadarose by 0.2 percent in August, the 17th consecutivemonth-on-month increase, on continued strength in large citiessuch as Toronto and Calgary, Statistics Canada said on Thursday.

The advance was greater than the 0.1 percent gain forecastby market analysts.

Prices for new homes in the combined Toronto-Oshawametropolitan region - which accounts for 26.6 percent of theentire Canadian market - increased by 0.3 percent in August overJuly. Prices in Calgary also rose by 0.3 percent.

Overall, new housing prices increased in 10 metropolitanareas, were unchanged in nine and fell in two. Prices in August2012 increased by 2.4 percent from August 2011, compared withthe 2.3 percent year-on-year advance recorded in July 2012.

The Canadian government, which imposed tighter mortgagerules earlier this year, and the Bank of Canada have longexpressed concern the housing market might overheat. The newhousing price index excludes condominiums, which the governmentsays are a particular cause for concern.

(Reporting by David Ljunggren; Editing by Jeffrey Benkoe)

((david.ljunggren@thomsonreuters.com)(+1 613 235 6745)(fax +1613 235 5890)(Reuters Messaging:david.ljunggren@thomsonreuters.com))

Keywords: ECONOMY CANADA/HOUSING