The average selling price of a Canadian home has fallen by 0.3 per cent in the past year, the first yearly decline since 2013.
The average price of a Canadian home sold on the multiple listing service (MLS) in July was $478,696, the Canadian Real Estate Association said Tuesday.
That's down 0.3 per cent compared to the same month a year earlier, and down five per cent from June, when the average price across the country was $504,458.
Stripping out Toronto and Vancouver, the average price nationally was $381,297. That figure is up by five per cent compared to last year, when houses outside Toronto and Vancouver sold for an average of $363,858.
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Prices were down, but so were sales. The realtor association says there also were 12 per cent fewer sales in July compared to a year ago.
"July's interest rate hike may have motivated some homebuyers with preapproved mortgages to make an offer," CREA president Andrew Peck said.
Ontario makes up a large percentage of Canada's overall housing market, and rule changes implemented by the provincial government in April aimed at cooling the market appear to have hit the Toronto area hard, with prices and sales figures well below the peak reached that month.
But CREA says there are signs that the impact of those changes are starting to wane.
"July marked the smallest monthly decline in Greater Golden Horseshoe home sales since Ontario's Fair Housing Plan was announced in April," said the realtor group's chief economist, Gregory Klump. "This suggests sales may be starting to bottom out amid stabilizing housing market sentiment. Time will tell whether that's indeed the case."
Scotiabank economist Derek Holt agrees that might be possible, as hot activity in Toronto is cooling quickly but from a very high peak. "It is possible that the pace of decline is already abating following much bigger declines ... in each of May and June," he said.
It it happens, it means the unwinding in Toronto's housing market will follow a remarkably similar path the one that Vancouver took a year ago, when B.C. implemented a 15 per cent foreign buyer's tax that hit the market just as hard, before recovering.
After having dipped in the second half of last year, benchmark home prices in the Lower Mainland of British Columbia have recovered and are now at new highs — up nine per cent in Vancouver and 15 per cent in the Fraser Valley.
Sales in the so-called Golden Horseshoe around Toronto are now down 44 per cent from March's peak, TD Bank economist Diana Petramala noted.
"The overall Canadian housing market is now in its fourth month of what we expect to be a soft landing," she said, "and there are very little signs that foreign investment and/or speculation has shifted into any other market following the implementation" of Ontario's non-resident speculation tax.
Indeed, outside of those two cities, there's little in CREA's report to cause much alarm.
"The story really depends on where you are in Canada," BMO economist Robert Kavcic said. "All eyes remain on Toronto as the correction continues to play out."
"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."