Home sales in July declined for the third consecutive month, led by a hot real estate market in Vancouver that may be showing signs of cooling, some analysts say.

National figures from the Canadian Real Estate Association (CREA) show that on a national basis, sales fell 1.3 per cent from June to July, while the number of newly listed homes rose 1.2 per cent. On a year-over-year basis, sales are down 2.9 per cent.

But in Greater Vancouver, monthly sales have plunged 21.5 per cent from their peak in February, the real estate group's report notes.

"The real eyecatcher is the fact that mighty Vancouver has been largely responsible for the recent cooling, with seasonally-adjusted sales now falling in five straight months, albeit from gaudy record levels at the turn of the year," said BMO senior economist Robert Kavcic in a commentary.

While falling sales sometimes lead to falling prices, that has yet to happen in Vancouver. According to the MLS Home Price Index, prices in Greater Vancouver are up 32.6 per cent year over year and are up 37.6 per cent in the Fraser Valley.

"This suggests that sales are being reined in by a lack of inventory and a further deterioration in affordability," CREA chief economist Gregory Klump said in a release.

"The new 15 per cent property transfer tax on Metro Vancouver home purchases by foreign buyers took effect on Aug. 2, so it will take some time before the effect of the new tax on sales and prices can be observed," he said.

In the Greater Toronto Area, prices are up 16.7 per cent from a year earlier.

Similar big gains were noticed in Victoria (up 17.5 per cent) and Vancouver Island (up 11.6 per cent).

Modest gains or slight losses elsewhere

Outside Ontario and B.C., price gains were much more modest. In Regina, for instance, home prices rose 2.7 per cent in the past year, while in Montreal, they were up 1.8 per cent.

Prices fell by 4.2 per cent year over year in Calgary and by 1.5 per cent in Saskatoon as they weathered the fallout from the big plunge in oil prices.

Nationally, the MLS home price index rose 14.3 per cent year over year — the biggest gain in almost 10 years.

CREA says the home price index is considered a more accurate reflection of home price trends because average prices can be distorted by such things as an increase in sales of top-end homes.

Sellers' market in GTA, Vancouver

But CREA also tracks average prices. It says the national average price of resale homes in Canada was $480,743 in July. That's up 9.9 per cent from July 2015. Excluding Greater Vancouver and the GTA from the picture, the average price gain was lower — 7.0 per cent to $365,033.

It's still a 2-horse race in the Canadian housing market if you lump in the areas surrounding Vancouver and Toronto. - Robert Kavcic, BMO senior economist

And if one excludes all of British Columbia and Ontario from the calculations, average prices actually slipped 0.2 per cent year over year.

The national sales-to-new-listing ratio slipped to 61.6 per cent in July. CREA considers a ratio of 40 to 60 to be a balanced market, with anything above 60 to be a sellers' market.

It says the ratio was above 60 per cent in about half of local markets in July, "virtually all of which continue to be located in British Columbia, in an around the Greater Toronto Area and across southwestern Ontario."

"It's still a two-horse race in the Canadian housing market if you lump in the areas surrounding Vancouver and Toronto," BMO's Kavcic noted. "All eyes will be on how prices in the former fare through the rest of the year, considering the new tax and already moderating supply-demand conditions."

TD economists issued a report Monday that forecasts an almost 10 per cent drop in Vancouver's real estate prices by the end of 2018. "While the decline in sales activity so far this year may partly reflect a lack of supply, the new 15 per cent land transfer tax on foreign buyers is likely to reinforce the downturn already underway," said TD economist Diana Petramala.

TD's forecast assumes that the tax will cause sales to fall an additional 14 to 20 per cent as foreign buyers leave the market and domestic buyers move to the sidelines.