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Photographer: James MacDonald/Bloomberg Photographer: James MacDonald/Bloomberg

Canada’s home sales were little changed in May, suggesting the residential real estate market is stabilizing after seeing large declines earlier this year.

Transactions fell 0.1 percent from April to 36,373 units, the Canadian Real Estate Association said Friday from Ottawa, keeping the level close to five-year lows. Economists surveyed by Bloomberg predicted sales would fall 1.1 percent, the average of four estimates.

The stabilization suggests home buyers are beginning to adjust to the impact of tighter mortgage rules and higher interest rates, easing concern about a sharper correction. Sales rose in about half of all markets. They climbed 1.6 percent in Toronto, the nation’s most populous city, after falling to recession-era lows in April.

“It’s a first sign” of “stability” in the market, Benjamin Reitzes, a Canadian rates and macro strategist at BMO Capital Markets, said by phone from Toronto. “For policy makers, that’s exactly what they are looking for, that the bottom isn’t falling out for housing.”

Home sales are settling at the lowest levels seen in Canada since 2012 Source: CREA

Still, CREA cut its 2018 sales forecast to 459,500, which would represent an 11 percent drop from 2017. In March, the group predicted a 7.1 percent drop.

Sales have fallen an average of 5.7 percent each month in the first four months of 2018.

Meanwhile, benchmark prices climbed 0.6 percent nationally in May, compared with April. The 1 percent advance from the same month a year earlier was the slowest since September 2009, and reflected weakness in the Toronto area, the report said. Annual price gains are accelerating again in Vancouver, which saw an 11.5 percent increase.

From a year earlier, the average sales price fell 6.4 percent to C$496,084 ($376,935), and sales dropped by 16.2 percent.

“The stress-test that came into effect this year for home buyers with more than a twenty percent down payment is continuing to suppress sales activity,” CREA President Barb Sukkau said in the report.

— With assistance by Erik Hertzberg

( Updates with comment and details throughout. )