The price of new homes went up in December, marking the first year-over-year increase in 16 months, said Statistics Canada today.

The new housing price index (NHPI) increased 0.1% in December, while market analysts had predicted a 0.3% rise.

The index was up 6.2% from December 2006, which is down from the double-digit increases in the latter half of 2006 and the early part of 2007.

The increase is mainly due to strength in the housing market in the Prairie provinces, said Stats Can.

Saskatoon saw the strongest price gain, with an annual price increase of 45.1%, a gain the agency attributes to higher costs for concrete and drywall, as well as higher land development costs reported by some builders.

In Alberta’s booming economy Calgary saw prices rise 6% between December 2006 and December 2007, slightly faster than the 5.0% year-over-year increase the month before, while in Edmonton, home buyers saw prices that were 21.5% higher than in December 2006, down from the high of 41.5% recorded in December 2006.

On the West Coast, the 12-month increase for Vancouver was 6.4%, unchanged from November.

“Moderating growth in this indicator is consistent with a subdued pace of consumer inflation,” said Rishi Sondhi, economist at RBC. “It is likely that price pressures will not stand in the way of further easing by the Bank of Canada as it works to offset the downside risks coming from a deteriorating U.S. economic outlook.”