Nationally home sales fell 3.1% in Canada from July to August, the fourth consecutive decline in a row, the latest index data shows.

However, actual (not seasonally adjusted) activity came in 10.2% above August 2015, according to the index report from the Canadian Real Estate Association (CREA).

The data also shows that the national average sale price increased by 5.4% year on year but the number of newly listed homes declined 2.7% month on month taking the average price to $456,722, the smallest increase since January 2015.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets.

Greater Vancouver’s share of national sales activity has diminished, causing it to have less upward influence on the national average price. Nonetheless, if Greater Vancouver and Greater Toronto are excluded from calculations, the average price is reduced by about $100,000 to $357,033.

The number of homes trading hands via Canadian MLS® Systems fell by 3.1% in August, the largest monthly decline since December 2014. Together with declines in each of the three previous months, the slowdown in August places national home sales activity 6.9% below the record set in April 2016.

Sales activity was down month on month in close to 60% of all markets in August, led by a steep decline in Greater Vancouver following the introduction of a new property transfer tax on homes purchased by foreign buyers while activity also dropped significantly in the Fraser Valley.

August marked the sixth consecutive monthly decline for home sales in the Lower Mainland, as transactions in Greater Vancouver and the Fraser Valley had already been retreating sharply from their peak reached in February. Much of the monthly declines in national sales in recent months reflect slowing activity in the Lower Mainland.

For the seventh month in a row year on year price growth accelerated for all property types tracked by the index. Two storey single family home prices increased by 16.3% year on year, as did townhouse/row units. One storey single family homes followed close behind with a rise of 14.4% while apartment unit prices rose 11.7%.

Prices increased the most in Greater Vancouver and the Fraser Valley, up 31.4% and 38.3% respectively. Smaller double digit year on year price gains were also recorded by Greater Toronto at 17.2%, Victoria at 18.9% and Vancouver Island at 13.1%.

By contrast, prices were down 4.1% in Calgary in August. The index report says that although prices there have held steady since May 2016, they have remained down from year ago levels since September 2015 and are 4.7% below the peak reached in January 2015.

Additionally, prices were down by 0.9% year on year in Saskatoon in August. While prices have remained below year ago levels since August 2015, they are on track to begin rebounding before the end of the year if current trends persist.

Prices were up by 6.6% in Greater Moncton, by 3.7% in Regina, by 2.5% in Greater Montreal and by 1.7% in Ottawa.

‘The sudden introduction of the new property transfer tax on homes purchased by foreign buyers in Metro Vancouver has created a cloud of uncertainty among home buyers and sellers,’ said CREA president Cliff Iverson.

‘That the tax applies to sales that had not yet closed shows how the details for a new tax policy can unnecessarily destabilize housing markets. More broadly, it speaks to the importance of evidence-based decision making to ensure that unintended consequences and collateral damage are minimized when new policies or tighter regulations affecting housing markets are being actively considered,’ he added.

According to Gregory Klump, CREA chief economist, single family homes sales were already cooling before the new land transfer tax on foreign home buyers in Metro Vancouver came into effect. He said that the surprise announcement of the new tax caused sales to brake hard.

Actual sales activity was up from year ago levels in about three quarters of all Canadian markets, led by Greater Toronto. By contrast, Greater Vancouver posted the largest year on year sales decline.

The number of newly listed homes fell by 2.7% in August 2016 compared to July. While new supply was down in just over half of all local markets, declines in the Lower Mainland, Greater Toronto and Montreal far outweighed the monthly rise in new listings in less active markets.

With sales and new listings both down by similar magnitudes in August, the national sales to new listings ratio was 61.6 % which was little changed from 61.8% in July. The ratio had previously been as high as 65.3% in May.

A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The index report shows that the ratio was above 60% in almost half of all local housing markets in August, virtually all of which continue to be located in British Columbia, in and around the Greater Toronto Area and across Southwestern Ontario. The ratio moved into the mid 50% range in Greater Vancouver in August after having begun the year at 90%.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.8 months of inventory on a national basis at the end of August 2016. This was up from 4.6 months in the previous three months and marked the first increase in almost a year.

The number of months of inventory had been trending lower since early 2015, reflecting increasingly tighter housing markets in Ontario and, until recently, in B.C. It nonetheless remains below two months in Victoria and virtually everywhere within the Greater Golden Horseshoe region, including Greater Toronto, Hamilton-Burlington, Oakville-Milton, Guelph, Kitchener-Waterloo, Cambridge, Brantford, the Niagara Region, Barrie and Woodstock-

Ingersoll. Indeed, major areas within the GTA have less than one month of inventory.

Home Sales Down in Canada for 4th Month in a Row by Property Wire