Home sales have declined by 12 percent since March.

Canadian home prices fell by six percent to $746,000 in April, as rising interest rates cooled the hot real estate market.

The Canadian Real Estate Association said on Monday that home sales dropped 12 percent nationwide in April, with the largest declines recorded in major cities like Toronto.

Prices peaked at a record high of over $816,000 in February this year, and the average home price has now fallen for two consecutive months. In March, the average price was $796,000, before dropping another 6 percent in April, which is usually a strong month for the housing market.

Jill Oudil, CREA president, said in a statement: "After two years of record numbers, housing markets in many parts of Canada have experienced a sharp slowdown over the past two months, in line with a jump in interest rates."

The average sale price can be misleading as it is easily affected by multiple high-priced sales in major cities like Toronto and Vancouver. It highlights a different figure called the Home Price Index as a better market measure because it adjusts for the volume and type of homes sold.

The HPI contracted by 0.6 percent in April, marking the first monthly decline in two years.

While prices have dropped from recent peaks, they remain about seven percent higher than a year ago.

Nonetheless, the numbers paint a picture of a cooling housing market compared to just a few months ago.

Rishi Sundi, an economist at TD Bank, said in a client note: "The steep rise in higher-priced units (like detached homes) during the pandemic may give way to a sharp decline."

"Going forward, we expect prices to continue to fall, reflecting a cooler demand background."

Edited by: Dima Abu Khair