Canada’s real-estate correction deepened, with prices falling for fourth straight month as the central bank ratchets up interest rates.

Benchmark home prices declined 1.7 per cent in July, to $789,600 according to data released Monday from the Canadian Real Estate Association. 

The number of sales also continued to drop, falling 5.3 per cent from June and 29.3 per cent from a year earlier, the data show. 

While an unprecedented boom drove Canadian home prices to record levels in the first two years of the COVID-19 pandemic, it has started to reverse since the Bank of Canada began raising interest rates. The benchmark overnight lending rate, which was holding at an emergency low of 0.25 per cent until March, is now at 2.5 per cent, with another outsized hike expected in September.

The home-price declines so far have been sharpest in markets with the biggest run-ups -- mainly Toronto and the communities around it -- but signs are emerging that weakness is now spreading across the country.

Nearly all districts in Ontario, the most populous province, saw prices drop in July. The biggest decline was in Huron Perth, west of Toronto on the shore of Lake Huron, where prices fell 6 per cent on the month. Home values in the Toronto suburbs of Mississauga and Oakville-Milton fell 5.3 per cent and 4.2 per cent, respectively.

With the central bank signaling the interest rate increases aren’t over, economists have been predicting even bigger home-price price declines have multiplied. Royal Bank of Canada has said this will be the biggest housing correction Canada has seen in at least 40 years as it continues into next year, while Desjardins Securities last week said average prices may lose 25 per cent of their peak value -- though that would still leave prices above their pre-pandemic levels.