OTTAWA -- The number of homes sold in July fell for the fourth consecutive month as sales in what have been the hottest and most expensive markets -- Toronto and Vancouver -- slowed.
The fewer number of sales in Toronto and Vancouver also led to a year-over-year drop in the average price of a sold home for the first time since February 2013.
"All eyes remain on Toronto as the correction continues to play out," BMO Capital Markets senior economist Robert Kavcic wrote in a note.
"It's now vividly clear that policy changes, regardless of the precise number of non-resident investor transactions they've impacted, have worked to alter market psychology that was bordering on dangerous through 2016 and early-2017."
Sales in Toronto have cooled since a move by the Ontario government in April to bring in more than a dozen measures, including a 15 per cent tax on foreign buyers, in an effort to slow the real estate market.
The decision by the province followed similar changes in British Columbia last year where a tax on foreign buyers was also introduced.
Compared with a year ago, the number of homes sold in Greater Toronto fell 40.7 per cent last month, while Greater Vancouver sales slipped 8.8 per cent.
The Canadian Real Estate Association said Tuesday that sales through its Multiple Listing Service fell 2.1 per cent in July compared with June.
The move leaves sales down 15.3 per cent from the record set in March --now considered the "peak" of the market -- and off 11.9 per cent compared with July 2016.
Meanwhile, the average price for a home sold in July edged down 0.3 per cent compared with a year ago to $478,696 due to fewer sales in the pricey Vancouver and Toronto markets. Excluding Greater Vancouver and Greater Toronto, the national average price was $381,297, up from $365,033 a year ago.
CREA said July sales were down from June in close to two-thirds of all markets. Greater Toronto fell 5.4 per cent compared with June, while Calgary slipped 5.5 per cent. Greater Vancouver edged down 1.7 per cent.
CREA chief economist Gregory Klump noted that July marked the smallest monthly decline in Greater Golden Horseshoe home sales since the changes announced by the Ontario government.
"This suggests sales may be starting to bottom out amid stabilizing housing market sentiment," Klump said in a statement.
"Time will tell whether that's indeed the case once the transitory boost by buyers with pre-approved mortgages fades."