Canadian home sales fell 1.6 percent month-over-month in October, the second month of falling activity for the housing market.

Previously well performing markets saw sales declines, including a 2.9 percent drop in Montreal and a 16.8 percent decline in Hamilton, according to the latest data release from the Canadian Real Estate Association (CREA).

“Sales fell for the second straight month in October, signaling that the post [mortgage stress test] bounce in activity observed from May to August has run its course,” writes TD economist Rishi Sondhi, in his latest note. “Rising borrowing costs are restraining activity.”

Sondhi notes that, while the market had seemed to adjust to stricter mortgage qualification rules over the summer, higher interest rates appear to be creating a dampening effect.

Meanwhile, national new listings fell 1.1 percent in October, keeping the national sales-to-new listings ratio relatively balanced at 54.2 percent. A ratio of between 40 to 60 is considered balanced, with readings above and below indicating buyers’ and sellers’ markets, respectively.

Prices also slumped — the average national home price fell 0.2 percent month-over-month, and 2 percent year-over-year.

“Policymakers are probably pleased with what has so far been an orderly slowdown in housing, with markets across the country generally balanced and prices growing at a more manageable pace,” writes Sondhi.

According to Gregory Klump, chief economist of CREA, the slumping activity reflects cooler conditions in the Golden Horseshoe region, while markets in British Columbia continue to underperform.

“Even so, the balance between sales and listings in these regions points to stable prices or modest gains,” writes Klump. “By contrast, the balance between sales and listings for housing markets in Alberta, Saskatchewan and Newfoundland indicates a weak pricing environment for homeowners who are looking to sell.”