It looks like the party is indeed over.

The Canadian Real Estate Association reports that home sales in April 2022 dropped by 12.6 percent compared to March.

More importantly, CREA noted that the “decline placed monthly activity at the lowest level since the summer of 2020”.

Prices are also trending down.

The home price index for all types of homes fell 0.6 percent month-over-month in April.

CREA stated that the drop was the “first month-over-month decline since April 2020”.

“Following a record-breaking couple of years, housing markets in many parts of Canada have cooled off pretty sharply over the last two months, in line with a jump in interest rates and buyer fatigue,” association chair Jill Oudil said in a report Monday (May 16).

The decline in sales follows the increase in mortgage rates.

The Bank of Canada has raised its interest-setting rate twice so far, and more hikes are expected.

The drop in sales and prices indicates that the Canadian housing market is settling down to its traditional level.

The market set new records in 2021 and 2020 as the COVID-19 pandemic made housing a priority for many.

In its new report, CREA noted that the number of transactions in April 2022 “came in 25.7% below the record for that month set last year”.

“That said, as has been the case since last summer, it was still the third-highest April sales figure ever behind 2021 and 2016,” the association noted.

The same trend can be said about of the home price index, a measure that is different from either average or median price.

CREA reported that while the index dropped 0.6 percent month-over-month in April 2022, the gauge was “still up 23.8% year-over-year”.