The number of resale homes sold in Canada is forecast to hit 459,600 in 2010, a 1.2 per cent decline from 2009.

A real estate agent puts up a sold sign in front of a house in Toronto in April. The Canadian Real Estate Association expects home prices to decrease in 2011. (Darren Calabrese/Canadian Press)

In its latest housing forecast Friday, the Canadian Real Estate Association said weaker sales activity in the key spring homebuying season in Canada's four most populous provinces prompted the downgrade.

"The jump in national sales activity earlier this year likely borrowed from the future," CREA president George Pahud said.

And expected interest rate increases to come will do nothing to stoke the real estate fire that burned brightly during the tail end of the recession.

Sales are projected to drop even further, by 7.3 per cent, to 426,100 units in 2011.

The national average home price is forecast to rise 3.5 per cent in 2010 to $331,600, with increases in all provinces. The national average price is then forecast to ease by 0.9 per cent to $328,600 in 2011.

The agency already lowered its 2010 sales forecast at the start of June. At that time, the agency was expecting 490,600 units to be sold this year.