The number of homes listed for sale across Canada fell in August, indicating the real estate market has reached a comfortable balance, figures from the Canadian Real Estate Association show.

In August, there were 74,993 new listings nationally, compared with 80,147 in July. That represents a monthly drop of 5.4 per cent, and a 3.4-percent decline year over year.

"Things are not as bad as some would have us believe. They're not bad at all," Gregory Klump, CREA's chief economist told CBCNews.ca.

In July, Canadians saw the first real drop in house prices in a decade after statistics showed the number of listings had increased, but not the number of sales.

Last week, a Merrill Lynch Canada report suggested Canada's housing market was in for a major correction similar to what is being seen in the U.S.

The Merrill Lynch report suggested that housing was more than 10 per cent overvalued in a number of cities, including Vancouver, Calgary, Edmonton, Sudbury and Montreal.

But Klump disputed that report, saying evidence of a balanced market comes in the form of fewer homes being listed for sale.

"I expected listings to drop. Not as soon as this, but it was anticipated," said Klump.

Downward pressure on housing prices occurs when the number of listings rises while the number of sales fall. Seeing that the number of listings fell is actually a good thing, he said.

"As our analysis shows, the Canadian housing market is stable and home sellers are not under pressure to sell. This is in stark contrast to the U.S. housing market, where there are a large number of distress sales," said Klump.

Of 94 markets across Canada, 52 were considered a balanced or even a seller's market. New listings remain most elevated relative to sales in British Columbia and Saskatchewan.

Close to 70 per cent of real estate boards in Canada reported year-over-year average price gains in August. However, lower activity in some of Canada’s priciest housing markets pulled the national average price lower by 4.6 per cent year-over-year in August.

The last time Canada saw a buyer's market nationally was April 1995.

"We're past the peak," said Klump. "The housing market has ended a cycle."