Prices for new homes in Edmonton jumped a nation-leading 6.8 per cent in August, bringing the increase over the last year to 37.8 per cent. Calgary posted a 3.5 per cent monthly increase for a 60.6 per cent annual gain.

The latest report from Statistics Canada showed that nationally prices for new homes are rising at their fastest pace since the late 1980s housing boom, which some analysts warn will stoke inflation concerns at the bank of Canada.

The increase in Statistics Canada's new housing price index in August was also greater than analysts had expected, noted BMO Capital Markets economist Michael Gregory. While the 1.5 per cent surge in prioces during the month, which left them 12.1 per cent above their year earlier, was largely the result of increases in Alberta, there was evidence housing price pressures were spilling over into neighbouring provinces, he said.

The bank of Canada only last month warned surging home prices pose the main inflation risk, he added.

Year-over-year price increases in several other western cities were also nearly into double-digits, including those in Regina, Saskatoon, Winnipeg, and Vancouver.

"This hints that pressures might be rippling from the Alberta epicentre," Gregory said. During the month itself, prices rose in 16 of 21 cities surveyed, including 2.5 per cent in Vancouver, and 1.7 in London, Ont.

Ted Carmichael, economist at J.P. Morgan, said the surge in home prices will also eventually spill over into other price increases.

"The rise in new hous prices will gradually feed into the consumer price index for shelter, putting steady upward pressure on core services inflation," Carmichael said.

The news of the continuing gains in housing in prices, while exaggerated by the surge in alberta and to a lesser extent other western cities, was surprising in that analysts have long been anticipating the housing market to cool, and the report followed news earlier this week of a greater than expected 2.4 per cent fall in the pace of housing construction starts last month.

"One may suspect speculative churning if prices and mortgage activity are picking up even though starts are falling," sakd carl Weinberg, head of high Frequency Economics, a U.S. based economic think-tank.

However, most analysts here dount that there will be any major retreat in housing prices in canada, as has happened in the U.S., where there are still concerns the bursting of the housing bubble could result in serious economic slowdown or even recession.

"The contract between the busting U.S. housing market and the solid Canadian one grows sharper by the day," said Merrill Lynch economist David Wolf, calculating that even excluding the increases in Alberta, new housing prices are still rising 6.3 per cent annually.

"The contrast in new house price trends lines up with divergences in the resale home market and residential construction activity to demonstrate that Canada's housing market is on a very different path than the U.S." Wolf said.

"We expect that Canada's resiliency here will translate ahead to more visible divergence in consumer spending and overall economic growth... ."

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