Resales of Canadian homes fell 0.1 percent in May from April to the lowest level in more than five years, the Canadian Real Estate Association said on Friday. The industry group said actual sales, not seasonally adjusted, fell 16.2 percent from a year earlier, while the group's Home Price Index was up 1.0 percent from May 2017.
Canada's once-hot housing market has cooled in the last year in response to rising interest rates and tighter mortgage rules - dubbed a stress-test - since January. While most economists expect a soft landing, some say there is a risk of a US-style crash.
CREA said slightly more than half of all local housing markets reported fewer sales in May compared to April, with housing markets in and around Toronto, the nation's largest market, mixed.
Activity came in below year-ago levels in about 80 percent of all markets, led overwhelmingly by the regions around Vancouver and Toronto.
A year ago, housing sales and prices were at or near record levels in many parts of Canada, but a series of regulatory changes, taxes on foreign buyers, tighter mortgage rules and rising interest rates have hampered demand.
"This year's new stress-test became even more restrictive in May, since the interest rate used to qualify mortgage applications rose early in the month," Gregory Klump, CREA's chief economist, said in the report.
"Further increases in the rate could weigh on home sales activity at a time when Canadian economic growth is facing headwinds from US trade policy frictions," Klump added.
The number of newly listed homes rose 5.1 percent in May but remained below year-ago levels. With new listings up and sales virtually unchanged, the national sales-to-new listings ratio declined to 50.6 percent in May from 53.2 percent in April. A ratio between 40 and 60 is considered balanced.
There were 5.7 months of inventory on a national basis at the end of May, a three-year high, CREA said.
The average price for homes sold in May fell 6.4 percent from a year earlier to just over C$496,000 ($377,158).