There are signs of a cooling trend in the city of Toronto's hot home market.

The Greater Toronto Realtors association says the number of pre-owned homes sold by its members last month was down 13 per cent in the city proper and down 5.4 per cent in the broader region compared with the same time last year.

The drop-off in Toronto's home buying volume comes after more than a year of above-average price increases in Canada's largest city.

Several studies have said Toronto real-estate is overvalued but there's been mixed opinion about whether prices will come down quickly or gradually.

The Toronto realtors say in the latest report that the average selling price in Toronto last month was $554,077, up eight per cent from $511,591 in June 2011.

The average price in the broader Toronto region in June was $481,512, up about seven per cent from $448,579 in the same month last year.

CBC business reporter Jeannie Lee said the fact that the average selling price has appreciated may — somewhat counterintuitively — indicate that a slowdown has begun in the Toronto market.

"When a market slows, the first homes to be hit are the lower-priced homes, obviously," Lee said Thursday.

While fewer lower-priced homes are being sold, buyers with the means to spend on higher-priced homes are able to continue to participate in the market, said Lee.

"And they keep selling those homes and that skews up the average selling price. So that’s what tends to happen. It’s the sign of an early part of a slowdown," she said. 

With files from CBC News