Canada's real estate market is showing signs of cooling off with national home sales and the average home price down year over year, indicators that have at least one senior economist wondering if the once red-hot market is entering a "Big Sleep."
The new data from the Canadian Real Estate Association follow several reports saying some real estate markets and some types of housing are overvalued, although there's a range of opinions about how much and how quickly prices will decline.
That's left economists and consumers watching closely for signs demand has softened to the point where prices will start going down.
On Monday, the CREA reported the number of previously owned homes sold last month dropped 4.4 per cent from June 2011, the first annual decline since April 2011.
Resales of homes were also down 1.3 per cent in June from May -- the second month-to-month decline -- with a total of 46,444 transactions through CREA members. That was down from 48,591 in June 2011, the association said.
"It's showing early signs that the market is softening but it's still running pretty strong," said Gregory Klump, CREA's chief economist.
Multiple Listing Service (MLS) sales also dipped by two per cent last month in Winnipeg. But Winnipeg REALTORS president Shirley Przybyl said last week the decline was more a pause in the action, rather than the beginning of a slowdown.
Spokespeople for Canada Mortgage and Housing Corp. and Royal LePage Real Estate Services also said last week they still expect the average selling price for resale homes to climb by about five per cent this year in Winnipeg.
The new CREA numbers also suggest the market was softening before Finance Minister Jim Flaherty announced new mortgage rules on June 21 -- a move the minister said was necessary because of the risk, among other things, of a housing bubble.
Klump said the latest restrictions on mortgages, which took effect on July 9, are expected to affect first-time buyers the most, but the overall changes to the real estate market won't be immediately known.
The national average home price in June was $369,339, down 0.8 per cent from the same month last year, CREA said.
However, CREA said its MLS Home Price Index -- which the association says is a better measure because it adjusts for different types of properties sold -- increased 5.1 per cent between May and June 2012.
BMO deputy chief economist Douglas Porter wondered whether the lower home sales in June could be the "start of the Big Sleep."
"Even before the new mortgage rules kicked in, all signs suggest that the Canadian housing market was already cooling -- the new rules will simply pull hard on a closing door," Porter said in a research note.
-- The Canadian Press, with files from staff