A real estate slowdown appears well underway, as home resales fell by 8.2 per cent in June compared to May, the Canadian Real Estate Association said Thursday.

Home sales slowed in June, the Canadian Real Estate Association says. (Darren Calabrese/Canadian Press)

"The housing market is becoming more challenging for sellers," CREA president George Pahud said.

It's the second consecutive month of major sales declines, as sales were 9.5 per cent lower in May than they were in April. Just as was the case in May, sales were lower in 70 per cent of surveyed markets in June.

On an annual basis, sales declined by 19.7 per cent compared to June 2009, while prices were 4.9 per cent higher.

"Prices have essentially stabilized since last fall, and it will be just a matter of months before the year-on-year price comparisons sag to around the zero line," BMO economist Doug Porter said.

Indeed, in the HST-impacted markets of Ontario and B.C., annual declines could soon be seen, Porter said.

Inventory piles up

As sales declined, the nation's housing stock increased, with inventory hitting 6.9 months on a seasonally adjusted basis. Inventory is the number of months it would take to sell all the houses on the market at the current sales pace.

Inventory is now at its highest level since March 2009. Meanwhile, the number of newly listed homes on CREA's Multiple Listing Service declined 6.8 per cent from May.

Prices also cooled but less so, with the average price of a home decreasing by 1.2 per cent to $342,662. In May, the average price of a resale Canadian home was $346,881.

There are fewer buyers now, and those who do buy are becoming more cautious, CREA economist Gregory Klump said.

"With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010."