Canadian home sales fell by 14.5 per cent in January compared to December — to the lowest level in three years — with the slow Toronto area market helping pull down the national average, according to the Canadian Real Estate Association (CREA).

Seasonally adjusted sales in the Toronto area were down 26.6 per cent between December and January, compared to 11.7 per cent in the rest of Canada for that period.

Although the national average home price rose 2.3 per cent year over year in January to a non-seasonally adjusted $481,000, Toronto-area prices declined in the same period — down 4.1 per cent to an average $736,783 — a drop the industry has attributed to the exceptionally heated early months of 2017.

The Toronto region and Vancouver “heavily skewed” the national average, said CREA. Without those two markets, the average would be more than $100,000 lower — $374,000.

Sales were down last month in three-quarters of Canadian markets, including all major cities, with many of the steepest declines in Ontario’s Greater Golden Horseshoe, said CREA.

But the real estate activity is still around the 10-year average.

The uncertainty that has consumers taking a step back from the housing market will persist unless the government addresses the shortage of supply in Toronto and Vancouver, said CREA.

“The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion, said CREA president Andrew Peck in a Thursday news release.

“They’re putting in regulatory measures out of concern for rising prices when they need to increase supply. The price increases are all about the balance between supply and demand,” CREA chief economist Gregory Klump told the Toronto Star.

Building more density into Toronto and Vancouver by bolstering what’s called the “missing middle” housing — a term that usually refers to laneway homes, stacked town houses and mid-rise apartments — would help address the inventory shortage, he said.

The number of homes on the market was down in January compared to December — 21.6 per cent nationally — the lowest level since 2009. The Toronto region was part of that trend.

Seasonally adjusted new listings declined 39.3 per cent in the Toronto area, said CREA.

There has been a trend among home owners to strategic listing in the spring when the real estate market is traditionally busiest, said Klump.

But typically the spring market would have begun in late January and certainly by February, and that hasn’t materialized yet this year, said Royal LePage agent Cailey Heaps Estrin, whose business is concentrated in the City of Toronto.

She thinks many sellers listed in the fall ahead of the Jan. 1 mortgage rule changes and there will be a new wave of listings likely in April.

“If we had inventory, it would be selling and it would be selling well. There’s tons of demand, there are just very few options for buyers,” she said.

“Anything we have listed in 2018, it has sold very, very well,” said Heaps Estrin.

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“My sense is the sellers perhaps aren’t getting an accurate read on just how much demand there is,” she said, citing negative media reports on the real estate market.

January home sales

• 22.5%

Year-over-year decline in home sales in the Toronto region

• 2.4%

Year-over-year decline in home sales nationally

17%

Year-over-year decline in re-sale home listings in Toronto region

4.4%%

Year-over-year decline in Canadian re-sale home listings

Source: Canadian Real Estate Association