(Adds regional data, economist comment)
By Andrea Hopkins
OTTAWA, July 15 (Reuters) - Sales of existing Canadian homes fell in June from May, the second consecutive monthly drop, as declines in Toronto and Vancouver outweighed gains elsewhere, a report from the Canadian Real Estate Association showed on Friday.
The industry group for real estate agents said sales were down a seasonally adjusted 0.9 percent last month from May. Actual sales, not seasonally adjusted, were up 5.2 percent from June 2015.
CREA said existing home sales are now a seasonally adjusted 2.6 percent below the record set in April 2016. Further price moderation, if sustained, could ease concerns of ahousing market bubble.
The government has taken several steps in recent years to try to slow the housing market and prevent homebuyers from taking on too much debt, including increasing the minimum down payment on more expensive houses and shortening the maximum mortgage length.
The Bank of Canada also reiterated a warning this week about possible speculation in Toronto and Vancouver, the two hottest markets, saying it was unlikely that economic fundamentals would justify continued strong price increases.
The CREA report showed sales activity was down in June from May in about half of all markets, including Toronto and Vancouver, where a shortage of listings has driven heady price gains in recent years.
“In keeping with the law of supply and demand, exceptionally low inventory combined with high demand continues to translate into strong price growth in these housing markets, where year-over-year price gains have been running in double-digit territory since late last year,” Gregory Klump, CREA chief economist, said in the report.
New listings rose 2.2 percent in June nationally, helping to ease the sales-to-new listings ratio to 63.3 percent in June from 65.3 percent in May. A sales-to-new listings ratio between 40 and 60 percent is consistent with balanced housing market conditions.
There were 4.6 months of inventory at the end of June, unchanged from May and the lowest level in more than six years, CREA noted.
The industry group added that its Canadian home price index was up 13.6 percent in the month from a year earlier. The national average home price was C$503,301 ($389,703) in June, up 11.2 percent from June 2015.
$1 = 1.2915 Canadian dollars Reporting by Andrea Hopkins; Editing by Chizu Nomiyama and W Simon