New home prices in Canada rose 0.3 percent in October from September, the fourth consecutive gain, as record low interest rates and a recovering economy spurred demand, according to Statistics Canada data on Friday.

Analysts surveyed by Reuters had forecast, on average, an increase of 0.4 percent in the new housing price index. Prices were down 2.1 percent compared with a year earlier.

On a monthly basis, the housing only component of the index rose 0.4 percent while the cost of land only slid by 0.1 percent.

Canada's housing market is heating up, recent sales data has shown, leading the Bank of Canada to warn buyers against getting too deep into debt because interest rates will eventually rise.

The bank has pledged to keep its benchmark interest rate at a historic low of 0.25 percent until at least the end of June 2010, on the condition inflation stays on track. (Reporting by Louise Egan, Editing by Chizu Nomiyama)

Canada Inflation