The association says June home sales amounted to 48,176, a 24 per cent drop from 63,280 during the same month last year.
On a seasonally adjusted basis, sales were down almost six per cent from May.
The association says larger declines were seen in April and May, but activity in June still fell slightly below average levels.
The national average home price in June fell two per cent from the same month last year to $665,849 and, on a seasonally adjusted basis, was down four per cent from May.
The association attributed the drops, which were not as large as those seen in April and May, to financial pressures prospective buyers have experienced as the Bank of Canada has continued to hike its key interest rate.
The central bank increased its key interest rate on Wednesday by one percentage point to 2.5 per cent in the largest hike the country has seen in 24 years, but CREA said the rate’s previous increases were already transforming the market last month.
“Sales activity continues to slow in the face of rising interest rates and uncertainty,” said Jill Oudil, CREA’s chair, in a news release.
“The cost of borrowing has overtaken supply as the dominant factor affecting housing markets at the moment, but the supply issue has not gone away.”
Robert Kavcic, senior economist with Bank of Montreal, said in a note Friday morning that the June figures show the housing market was “seriously wobbling” even before the Bank of Canada moved to hike rates again this week.
“The bottom line is that the market had already cracked after the (central bank’s) initial move in rates, which only reinforces how sentiment-driven the market was. This week’s 100-bp rate hike sets us up for an even deeper correction through next year,” he wrote.
These observations mirror what real estate agents have been reporting for months: the market is cooling.
In typically heated markets like the Greater Toronto and Greater Vancouver Areas, they have noticed homes sitting for sale for far longer than they would have last year or at the start of the year, when the pace of sales was torrid.
Buyers are now waiting on the sidelines to see just how much purchasing power they could lose as rates climb, but have also put off making offers because forecasts have lead them to believe prices will drop even further.
Last month, CREA predicted the national average home price will rise by 10.8 per cent on an annual basis to $762,386 in 2022. It forecast the largest price gains for Maritime provinces, followed by Ontario and Quebec.
The lower prices mean it’s the buyer’s “time to shine,” said Wins Lai, a Toronto broker.
Even though rates are up, she said it’s a particularly good time for first-time homebuyers to get into the market because prices aren’t as high as they previously were and listings are up.
The association found new listings climbed by four per cent month-over-month and 10 per cent year-over-year.
Much of the frenzy has dissipated too.
“Most of my colleagues that are trying bidding wars … they only got one offer because the amount of buyers has definitely slimmed down,” she said.
“They look at the rates and they look at their investment and they say, ‘hey, does this make sense?'”
For sellers, it’s “a tough pill to swallow,” she added.
Most of June’s declines in price came from Ontario, but CREA has also detected an easing in B.C. and said prices tend to be “more or less flat” in the Prairies.
Quebec is showing small signs of declines and on the East Coast, prices are continuing to rise but have stalled in Halifax-Dartmouth, CREA said.
The association also found new listings climbed by four per cent month-over-month and 10 per cent year-over-year.
On a national scale, Ksenia Bushmeneva of TD Economics feels price relief will continue.
“The Bank of Canada isn’t done yet and is expected to continue taking rates higher through the rest of this year (although perhaps not at such a breakneck pace),” the economist wrote in a note.
“As such, we expect that home prices and sales will move even lower amid further pressure from borrowing costs.”
— with files from Global News’s Craig Lord
© 2022 The Canadian Press