In its latest data release, the Canadian Real Estate Association reported that residential sales across the nation fell by 0.4% month-over-month in September, the first decline since April.

The slowdown mirrored the more significant annual trend. Compared to the same time last year, September sales decreased by 8.9%.

CREA attributed this mainly to weaker numbers from the country’s top markets. Vancouver’s volume experienced a marked 1.5% month-over-month drop along with a 1.2% decrease in prices, while Toronto experienced a 0.5% sales shrinkage with a 0.1% increase in average prices.

Nationally, the benchmark sale price of a home in September was a little under $487,000, up 0.2% year-over-year.

CREA president Barb Sukkau cautioned that this lethargy might just be the beginning, as many urban markets are expected to “become even more restrictive” in the next few months due to sustained pressure from interest rate hikes and tighter mortgage regulations.

“In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price,” CREA chief economist Gregory Klump added, as quoted by The Canadian Press.

“However, in places where buyers are keen to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price. It will be interesting to see how supply and demand respond to rising interest rates amid this year’s new mortgage stress-test.”

These developments indicate that home sales nationwide will exhibit a more “moderate pace” in the near future, TD Economics stated.

“[The CREA report] is consistent with our forecast calling for resale activity to rise at a more moderate pace in coming quarters, as increasing borrowing costs and stretched affordability conditions in key markets keep a lid on demand,” bank economist Rishi Sondhi wrote in a note.

National Sales Volume Feels The Pull from Vancouver & Toronto by Ephraim Vecina | Canadian Real Estate Wealth