In its latest round of figure releases, the Canadian Real Estate Association (CREA) noted that the 2.8% month-over-month decline of existing home sales in May might indicate a possible cooldown in the country’s housing markets next year.

As reported by Garry Marr for the Financial Post, CREA projected that 2017 sales will grow by only 0.2%, after a predicted 6.1% increase by the end of this year.

“National sales activity and average prices reached new heights in the first half of 2016 amid a growing supply shortage of single-family homes in British Columbia and Ontario, particularly in BC’s Lower Mainland as well as in and around the Greater Toronto Area,” the association stated in a news release.

Part of what would pull down next year’s market performance would be sales volume in British Columbia and Ontario, which would decline and remain static, respectively.

“In these two provinces, luxury sales activity is anticipated to recede from current levels, resulting in a decline in their share of total sales activity,” CREA explained.

“This suggests a lack of supply may be starting to rein in sales amid a continuation of strong housing demand,” chief economist Gregory Klump added. “The proportion of sales above that is just not predicated to rocket ever higher.”

Meanwhile, Alberta and Saskatchewan home sales are expected to benefit from the upward trend in oil prices.

Despite the steady growth over the past few years, however, CREA maintained that 2007 remains the best year for housing sales in the country.

Observers voiced cautious agreement with the association’s prediction that a market slowdown is in the offing.

“The long-awaited cooling of Canada’s housing market may be finally at hand,” Royal Bank of Canada senior economist Robert Hogue said. “Only time will tell. When you look at market conditions in Canada’s two hot markets, it is still very, very tight.”

CREA : Moderate May Home Sales Point at Possible 2017 Cooldown by Ephraim Vecina | Canadian Real Estate Wealth