The Calgary housing market is adjusting to lower demand from buyers who want more affordable homes, a new report suggests.

Canada Mortgage and Housing Corporation (CMHC) released its second-quarter report Thursday, offering a positive outlook for the Alberta market that has struggled following the 2014 drop in oil prices.

Both sales and listings have declined in recent years but at differing rates, so for a while, there had been more sellers than buyers. Now the market is beginning to balance out to accommodate the lower demand, CMHC has found, although some overbuilding persists.

"New listings and new home production levels are generally moving lower, and more affordable options in the market have been experiencing demand growth," senior economics analyst James Cuddy said in the report.

"These trends help put the market on a path toward balance; however, it will take time as inventories remain elevated."

Builders are slowing down production, but at a slower rate than home sales, so houses are still being built at a rate beyond what the market is accommodating.

Condo construction and sales are closer to evening out, the report says.

Prospective buyers are seeking more affordable options as they face a high unemployment rate, a decline in real personal disposable income and an increase in interest rates.