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National home prices fell in February for the 12th straight month, but sales rose modestly in a potential sign that would-be buyers have started adjusting to higher borrowing costs.

The Home Price Index, which adjusts for pricing volatility, reached $704,300 last month, a 1.1-per-cent fall from January and a 16-per-cent loss from last February, when values hit their record high. The monthly decline was not as large as January’s decrease of 1.9 per cent, and some regions such as London, Ont., showed a tiny increase in prices, according to the monthly report from the Canadian Real Estate Association (CREA.)

The volume of sales rose 2.3 per cent from January to February, the largest monthly gain since the Bank of Canada started hiking interest rates early last year. As mortgages became more expensive, many buyers no longer qualified for a large enough loan to buy a home. Other buyers and sellers had been waiting for a sign that the central bank would stop raising interest rates. Now that the Bank of Canada has said it will take a break to see how the higher interest rates ripple through the economy, buyers are venturing out again, according to realtors.

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“With the number of interest-rate hikes, people are feeling that this is the reality of our real estate market right now,” said Neda Beaulac, a real estate broker with Blue Forest Realty Inc. in London, where home prices dropped as much as 27 per cent from last year’s peak.

Ms. Beaulac said her clients are motivated to buy now because they believe that mortgage rates have stabilized. She said more buyers are coming out every week. Yet at the same time, homeowners are reluctant to sell, which has driven the number of new listings in London down by 24 per cent from January to February, according to CREA data.

Ms. Beaulac said some properties in London are drawing multiple offers again. However, the offers are coming in with conditions and are rarely over the asking price.

That is a similar trend across the country, where the number of new home listings fell 8 per cent from January to February. Most of Ontario was down by double digits. In Kitchener-Waterloo, new listings fell by 28 per cent, Ottawa was down by 26 per cent and Toronto had declined by 21 per cent.

CREA senior economist Shaun Cathcart said there were similarities between this year and 2019, when the country’s housing market rebounded after a slowdown related to stricter mortgage rules. He said there were “modest green shoots,” including the increase in sales, dwindling inventory and the fact that the monthly price declines had shrunk.

As of the end of February, CREA said there were 4.1 months of inventory remaining. That is a measure of the amount of time it would take to sell all the listed properties if the pace of sales remained the same. The long-term average has been just over five months.

The ultra-low inventory also suggests that homeowners have been able to make their mortgage payments and have not been forced to sell their properties. However, mortgage and banking experts say it is too soon to see the full impact of the interest-rate hikes, since many borrowers will not pay the higher costs until they renew their mortgages.

Nicolle Williams, who has worked as a mortgage agent in the greater Toronto region for two decades, said she is seeing financial stress among some of her clients. Ms. Williams said she is talking to her clients all the time about alternatives. She said if her clients can’t afford the higher monthly payment, she has provided advice ranging from downsizing and turning part of the home into a rental to lengthening the amortization, which is the amount of time it takes to pay down the entire loan.