Home sales in the GTA is taking a hit month after month leading to very few transactions.

Home sales in Canada are expected to fall by 27,000 units or more than 5 per cent in 2018, which will translate into a loss of $1.1-billion in economic activity next year, according to the Canadian Real Estate Association.

CREA released its 2018 forecast Thursday, taking a significantly more negative tone than some other forecasts released recently. The real estate association, which represents agents across Canada, forecasts the number of homes sold nationally will fall 5.3 per cent next year to 486,600, which comes on top of a projected 4-per-cent decline in 2017.

CREA predicts that national average home prices will drop by 1.4 per cent next year to an average of $503,100 in 2018 from a projected average of $510,400 in 2017.

Earlier this week, real estate firm Royal LePage predicted national home prices will rise 4.9 per cent next year, while Re/Max forecast a national price increase of 2.5 per cent in 2018.

CREA’s forecast anticipates greater weakness in Ontario housing in 2018, however, and says that will be the key driver behind national trends. CREA predicts the volume of home sales will fall by 10 per cent in Ontario next year on top of an almost 9-per-cent decline in 2017, leading to a 2.2-per-cent decline in average home prices in the province.

CREA’s Ontario forecast is the weakest for any province in 2018 in terms of the percentage decrease in both sales volumes and average prices.

CREA said one driver behind the weak forecast for Ontario is an expected reduction in sales of higher-priced homes in the Toronto area in early 2018 compared to early 2017, which will reduce average prices as a result.

Based on research by real estate data firm Altus Group, CREA said the anticipated decline of 27,000 sales in Canada in 2018 translates into a decrease of $1.1-billion in economic activity and 12,000 fewer jobs.

The weak forecast comes despite recent improvements in Ontario’s market following a downturn that began after the Ontario government unveiled a package of reforms in April aimed at cooling the overheated housing market in the Toronto region. The number of housing units sold in the Greater Toronto Area in November climbed by 16 per cent over October on a seasonally adjusted basis, for example, although were down 14 per cent compared to November last year, CREA said.

On a national basis, homes sales climbed 3.9 per cent in November over October for the fourth consecutive month of rising sales numbers, CREA said. The national average sales price was up 2.9 per cent in November compared to the same month last year.

CREA chief economist Gregory Klump said there is positive momentum heading into the year end, but it remains to be seen whether the momentum will continue after Jan. 1 when tougher mortgage qualification rules will take effect.

Like other forecasts, CREA also expects new mortgage rules announced in October by Canada’s banking regulator will be a key factor in cooling sales in 2018. All provinces except for Quebec and Newfoundland are likely to see sales fall because of the mortgage rule changes, CREA said.

CREA president Andrew Peck said the pending change may have convinced some buyers to purchase in November and December before the rules take effect, which means there could be a “pull-forward” of sales that will contribute to a slump in the first half of 2018.

“Evidence of this is mixed and depends on the housing market,” he said in a statement. “It will be interesting to see whether December sales show further signs of home purchases being fast-tracked.”

The new mortgage rules, coupled with anticipated further interest rate increases, are expected to hold sales in check in Greater Vancouver and the Greater Toronto Area, CREA said.

British Columbia is expected to see a 3.7-per-cent drop in the volume of home sales next year and no change in average prices.

Quebec, however, is expected to have the highest price growth in Canada next year as Montreal’s housing market continues to climb. Prices are forecast to rise 4.2 per cent in Quebec next year, CREA said, and the volume of sales is expected to climb 0.9 per cent.

While the sales volume growth appears modest, Quebec is one of only two provinces expected to see any growth in sales volumes next year. Newfoundland is expected to lead the country in terms of the percentage increase in sales, with volumes expected to rise by 1.3 per cent. Average prices in Newfoundland are expected to fall 1.9 per cent next year, however.