Canada's housing market is continuing its slowdown, with both prices and sales volumes well down in July from where they were a few months ago.

The Canadian Real Estate Association said Monday that the number of homes sold has now fallen for four months in a row, as has the average selling price. Sales in July 2021 were 15 per cent lower than they were in the same month a year ago, but the group that represents realtors notes that last year's number was the busiest July ever.

"The slowdown we've seen in home sales over the last few months has not been surprising, given that the level of activity we were seeing back in March was unsustainable," CREA's chief economist Shaun Cathcart said. "We are not returning to normal, we are only returning to where we were before COVID, which was a far cry from normal."

About two-thirds of all markets across the country saw sales decline, with significant declines in Prince Edward Island, Alberta and Saskatchewan. Sales were slightly lower in Ontario, Quebec and B.C., while they increased slightly everywhere else.

The average price of a Canadian home that sold on the MLS service was $662,000. That's down from the all-time high of $716,828 seen in March 2021.

While selling prices are down from March, they are still well up compared to where they were this time last year, with CREA reporting that its House Price Index rose by 22 per cent in the year up to the end of July. That's down slightly from 24 per cent in June.

TD Bank economist Rishi Sondhi says the July numbers suggest the market is in fact cooling, but is not on track to go ice cold any time soon.

"Despite the likelihood of further sales declines, prices should trend higher in coming quarters as markets still remain incredibly tight," he wrote in a report. "However, the rate of growth should be much slower compared to earlier in the pandemic, weighed down by tough affordability in several markets and compositional forces (i.e. a rising share of lower-priced units in overall sales)."