(Bloomberg) -- Toronto’s housing market posted its biggest monthly sales decline in a year last month, prompting the city’s realtor board to call for a review of new mortgage rules it says are keeping buyers on the sidelines.

Sales fell 7.7 percent on a seasonally adjusted basis to 6,212, the largest decline since February 2018, the Toronto Real Estate Board reported Tuesday. Benchmark prices, which adjust for the type of home sold, climbed 0.8 percent from the prior month to C$767,800 ($576,400).

The decline in transactions so far this year extends 2018’s losses which were the worst in a decade, leading to speculation policy makers went too far when they added stress tests to mortgage-lending requirements. The regulator that imposed the rules -- the Office of the Superintendent of Financial Institutions -- should review them, and amortization periods for federally insured mortgages should be extended to 30 years to give buyers a break, the real estate board said.

“The OSFI mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy,” Gurcharan Bhaura, TREB’s president, said in a statement. “There is a federal budget and election on the horizon. It will be interesting to see what policy measures are announced to help with home ownership affordability.”

Meanwhile, new listings also declined, falling 6.2 percent from a year earlier to 9,828. The fact new listings fell more than sales suggests conditions became tighter over the past year, supporting price growth, the board said. Average home prices rose 1.6 percent from a year earlier to C$780,397.

The semi-detached segment was the best performer, with average prices rising 9.9 percent to C$832,569 on the year. Condo prices jumped 6.1 percent to C$562,161. Detached homes declined 2.1 percent to C$980, 914.

The realtor board warned of the potential consequences of any further declines, saying the substantial drop in sales compared with the 2016 peak has translated into a “hit to the economy” in the billions of dollars.

“This hit has also translated into lower government revenues and, if sustained, could impact the employment picture as well,” Jason Mercer, the board’s director of market analysis, said in the statement.

--With assistance from Natalie Wong.

To contact the reporters on this story: Chris Fournier in Ottawa at cfournier3@bloomberg.net;Erik Hertzberg in Ottawa at eschmitzhert@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Stephen Wicary

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