A slowdown in demand had been widely expected in July, as many purchases were brought forward into the first half of the year in advance of the introduction of the HST. (CBC)

The new harmonized sales tax (HST) introduced in Ontario last month is being blamed for the decline of housing sales in Ottawa.

The Canadian Real Estate Association (CREA) said July sales in the city plunged 27.1 per cent from the previous month.

The association tracks the numbers through the Multiple Listing Service. It had been expecting the slowdown as consumers rushed to close deals ahead of the July 1 introduction of the HST. Nationally, home sales continued to decline in July, CREA said, but the decline was almost entirely the result of fewer sales in British Columbia and Ontario.

A slowdown in demand in these two provinces had been widely expected in July, as many purchases were brought forward into the first half of the year in advance of the introduction of the HST.

"The soft sales figures we're seeing right now can be attributed in part to accelerated home purchases earlier in the year," said CREA President Georges Pahud.

"Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals," he said.

Home prices edge up

"The average price of homes sold by the Canadian multiple listing service in July was $330,351, edging up one per cent from the same month last year," said Alyson Fair, spokeswoman for CREA.

"While year-over-year comparisons have been shrinking as prices stabilize, the national average home price is likely somewhat understated this month, since the majority of activity declines occurred in British Columbia and Ontario, which include many of Canada's most expensive markets," she said.

The association advises people looking into selling their homes to consult realtors to get current information before they close a deal.