TORONTO (Reuters) - Conditions in the Canadian housing market remain relatively favorable, with prices continuing to rise overall, Sheryl Kennedy, deputy governor of the Bank of Canada, said on Monday.

"The moderation in activity and price increases that we have seen in recent months is both expected and welcome," Kennedy said at an investment industry conference in Banff, Alberta.

The Canadian housing market is not showing signs of having excess supply, but current problems in the U.S. housing market and lessons from previous boom-and-bust cycles mean that policy makers cannot become complacent, she said, noting that the housing market plays a big role in the nation's economy.

In the short term, new house construction and resale listings can be slow to adjust to market changes "and therefore significant price changes can occur" when demand changes, Kennedy said.

(Reporting by Lynne Olver; editing by Rob Wilson)

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