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Canada's housing market may have peaked in December, the Canadian Real Estate Association said as it released January statistics that showed a slight pullback in resale activity.

Seasonally adjusted figures show a market that is cooling, albeit slightly, with a drop of 2.8 per cent from a record-setting December.

Ontario accounted for about half the national decline. Activity was also down in British Columbia, Alberta, and Manitoba, but reached new highs in Quebec.

“One car doesn't make a parade, so a few more months of results showing a cooling trend will be required before talk of a Canadian housing bubble begins to fade,” said Gregory Klump, the association's chief economist. “It could take until the second half of the year before a cooling trend becomes evident, since home buying activity may continue to be accelerated in the first half of 2010 by expected interest rate increases, and by the introduction of the HST in Ontario and British Columbia on Canada Day.”

The release comes a day after the federal government moved to cool the market, which has been one of the key driver's of Canada's economic recovery. While Finance Minister Jim Flaherty said he didn't believe the market was overinflated, he capped the amount of equity homeowners could take out of their homes at 90 per cent (from 95 per cent), promised to cut speculators out by raising the minimum down payment on a secondary property to 20 per cent from 5 per cent and ensuring that all mortgage applications are stress tested as higher levels than they are issued.

The changes, which come into effect in mid-April, could lead to a short-term rush on homes as buyers on the edge of affordability scramble to slip in under the current regulations.