TORONTO -- Canada's housing sector is facing a high degree of vulnerability to market instability for the seventh straight quarter, with Toronto, Hamilton, Vancouver and Victoria shouldering the brunt of the risks.

That's according to the Canada Mortgage and Housing Corporation, which analyzed overheating, acceleration of home prices, overvaluations and overbuilding in markets across the country in its quarterly assessment, released on Thursday.

"There is a lot of demand for existing homes relative to supply and that is why the overheating indicator is high in Vancouver, Victoria, Toronto and Hamilton," said CMHC chief economist Bob Dugan.

"We have this constraint on the supply side, but at the same time, the local economies (in Toronto and Vancouver) have been very strong, generating a lot of jobs, attracting people to live in those markets, so there has been a lot of increase in demand in these markets, but without the supply, that demand goes into house price increases."

Even though stricter regulations around uninsured mortgages from the Office of the Superintendent of Financial Institutions were in effect throughout the quarter, the CMHC report said Toronto's balance between supply and demand was not affected and the sales-to-new listings ration remained "virtually unchanged."

The OFSI rules, it said, heightened demand for more affordable housing within the city, just as the city was seeing a decline in the inventory of houses in all categories.

Dugan said there weren't any surprises CMHC found when compiling the report, but he did spot "a little bit of a softening" of market activity in Toronto and less of a "spillover" in demand from the city to neighbouring communities, including Hamilton.

However, CMHC said Calgary, Edmonton, Saskatoon and Regina had still fared much better. It assessed the cities as having moderate vulnerability because of overbuilding.

Winnipeg, Ottawa, Quebec City, Moncton, Halifax and St. John's, it said, faced even less risk, earning a low vulnerability ranking.

Montreal also fell into that category, but CMHC warned it might have to revise that assessment, given the rapid growth of house prices in some neighbourhoods.

"We just have our eye on that market to see whether price growth remains sustained and maybe spreads to more neighbourhoods within Montreal," said Dugan. "It could be enough down the road that we might have to sort of trigger a warning related to price acceleration."