China’s housing market continued to show a modest slowdown in February as new data show that price growth was capped by discounts in some cities while the Lunar New Year holiday had an impact on sales overall.

Average new-home prices issued by data provider China Real Estate Index System on Friday showed prices grew 10.79% in February from a year earlier, compared with January’s 11.1%, which also slowed from December’s 11.5%.

The survey tracks new-home sales in 100 Chinese cities. The average price in February rose 0.54% compared with January, the survey said. That is down from 0.63% in January over December, which was the slowest on-month gain in more than a year.

More customers are staying on the sidelines since some property developers started to introduce price cuts from mid-February, sales agents said. In Hangzhou in east China, at least two property developers introduced discounts on their new homes last week.

While January and February are typically slower periods for home sales, some observers have warned that housing prices in China may cool in 2014 because many developers are concerned about clearing inventory in places where there is an oversupply of homes, especially in tier two and tier three cities.

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