Home sales across the country dropped 28 percent since the market peaked in March 2021.

Although the Canadian Real Estate Association wouldn’t be surprised if media outlets would lead their stories with this “moderation of sales activity”, the organization believes there’s a more important thing that is happening in the market.

“It’s record-low inventories that should be our focus,” CREA chair Cliff Stevenson said in a report Monday (August 16).

The report covers market activity in July 2021, which saw a 3.5 percent month-over-month decline in sales from June.

Last month’s sales also marked an annual decrease of 15.2 percent from July 2020.

However, Stevenson said that these are “unprecedented and challenging times”.

“We still have extremely unbalanced housing markets all over the country,” Stevenson said.

In detail, the number of newly listed homes dropped by 8.8 percent in July compared to June.

The declines were “led by a who’s who of big Canadian markets”, which are the Greater Toronto Area, Montreal, Vancouver, and Calgary.

“Across the country, new supply was down in about three-quarters of all markets in July,” the CREA report stated.

Moreover, the decline in new listings was “enough to noticeably tighten the sales-to-new listings ratio despite sales activity also slowing on the month”.

CREA noted that the national sales-to-new listings ratio was 74 percent in July 2021, up from 69.9 percent in June.

For context, the association noted that the long-term average for the national sales-to-new listings ratio is 54.7 percent.

“Based on a comparison of sales-to-new listings ratio with long-term averages, the tightening of market conditions in July tipped a small majority of local markets back into seller’s market territory, reversing the trend of more balanced markets seen in June,” the CREA report stated.

Also, there were 2.3 months of inventory or total number of homes for sale on a national basis at the end of July 2021, “unchanged from June”.

“This is extremely low – still indicative of a strong seller’s market at the national level and in most local markets,” CREA reported.

The associated added, “The long-term average for this measure is twice where it stands today.”

Meanwhile, the home price index rose 0.6 percent month-over-month in July 2021, and marked a 22.2 percent increase year-over-year.

In the report, CREA senior economist Shaun Cathcart said that the slowdown in sales has “not been surprising, given that the level of activity we were seeing back in March was unsustainable”.

However, Cathcart noted that things are “not returning to normal”.

“The problem of high housing demand amid low supply has not gone anywhere – it’s arguably worse,” Cathcart stated.