The real estate industry is downplaying a third consecutive month-to-month decline in Toronto-area home prices that saw the average cost of a home drop $173,000 between April and July — from $919,449 to $746,216.

Prices were still up 5 per cent year over year, from $710,471 in July 2016. The numbers, released by the Toronto Real Estate Board (TREB) on Thursday, are averaged across all housing types.

It's the kind of annual mid-single digit increase that indicates a return to healthy market conditions following months of record price escalation, according to the industry.

There were 5 per cent more new listings on the market compared to the same period last year, but a dramatic 40.4 per cent drop in the number of home sales.

The short-term price decline could make some owners "a little tense" if they are thinking about selling, said Christopher Alexander, regional director at Re/MAX Integra.

But, he said, homeowners need to remember that, "Last year was a record year across the board."

"Yes, sales are way down (but) prices have only fallen 5 per cent from June to July, which is exactly what we had last year, and listing inventory is only up 5 per cent. So I don't see a flood of extra inventory to distract buyers from making quick decisions," said Alexander.

He echoed TREB's caution that summer statistics aren't the most accurate market indicators.

"We're now back to a normal summer,” said Oakville agent Tracy Nursall of Sage Real Estate. “Normal summer means the volume of sales go down. We had rainy weather, everybody waited — now everybody's at the cottage and September's going to be very busy."

But for buyers looking for more space, this is the move-up market they've been waiting for, she said.

"If you lose 5 per cent on your townhouse and you're going into a detached that has also lost 5 per cent, the dollar difference is significant. It's just that people are still clinging like a spurned lover to the old March market," said Nursall, referring to the first-quarter peak when home prices averaged $916,767.

TREB reported the biggest decline in sales volumes last month in higher-priced, single-family homes, which were down 47.4 per cent year over year, compared to a 30 per cent drop in the condo sales.

Detached house prices rose 4.9 per cent region-wide in July and condo prices were up 23.2 per cent.

Prices are holding as volumes plummet because "buyers are perched on the sidelines holding their breath wondering if home values will re-set lower," said Royal LePage CEO Phil Soper. "But in a strong economy like this, my expectation is that sellers will continue to hold firm and not let their properties go at a discount to market value."

Housing supply will continue to contribute to price pressure in the Toronto area, he said. Even though it appears there's an over-supply at the moment, "we'll be back to talking about housing shortages by next spring"

"I hope that this short-term market correction doesn't encourage policy makers to ignore the hard work that must begin on a long-term housing strategy for the GTA," added Soper.

Housing Minister Peter Milczyn said that the July TREB numbers are proof the government's Fair Housing Plan, including the 15-per cent foreign buyers tax, is working.

"We recognized that housing affordability was a real and growing concern for many people. The goal of the plan was to make buying and renting a home more affordable for people across the province," he said in a statement.

"(They show) that more supply is becoming available and that there has been a more moderate pace of annual price growth," he said.

Files by Kristin Rushowy