Canada鈥檚 housing market softened slightly in July from a month earlier as sales of existing homes dipped and new listings inched up, the Canadian Real Estate Association said.

Sales were down 0.7 per cent from June when seasonally adjusted, though up 4.8 per cent from a year earlier, while new listings were up 0.9 per cent on a month-over-month basis.

The small pullback in July came despite a second rate cut from the Bank of Canada late in the month. While the start of cuts haven鈥檛 yet translated into a notable bump in sales, conditions are starting to shift, said CREA chair James Mabey in a statement Thursday.

鈥淲hile it wasn鈥檛 apparent in the July housing data from across Canada, the stage is increasingly being set for the return of a more active housing market.鈥�

More rate cuts expected ahead, along with pent-up demand, should lead to a rekindling of the housing market next year, the association said.

For now the market remains fairly subdued, with sales volumes at reasonable levels, and for the most part listing flow not saturating the market and prices holding steady, said BMO economist Robert Kavcic.

鈥淪tability describes the Canadian housing market,鈥� he said in a note. 鈥淐onsidering the massive swings in prices, activity and interest rates in recent years, this is an outcome that the industry should be thrilled with.鈥�

The rise in listings and dip in sales pushed the market a little more in favour of buyers with the sales-to-listing ratio coming in at 52.7 per cent in July, down from 53.5 per cent in June, but it鈥檚 still considered balanced territory.

And while listings were up from last year, the national average home price was down only 0.2 per cent from last year to $667,317.

The home price index, which aims to represent typical home sales, did show a 3.9 per cent price decline from last year, while up 0.2 per cent from June.

Markets remain favourable for sellers in the Prairies and Atlantic Canada as affordability attracts buyers, while Vancouver and Montreal look mostly balanced, said Kavcic.

Ontario is the soft spot with a scattering of buyers markets, while Toronto鈥檚 detached market is holding firm even as the condo market has been inundated with supply.

Kavcic said while the recent rate cuts haven鈥檛 changed the market much, that was expected as few buyers were using variable mortgages 鈥� the type that responds immediately to Bank of Canada rate changes.

But as the bond market, which determines fixed-rate mortgages, begins to respond to anticipated cuts ahead in both Canada and the U.S., borrowing rates could start to come down.

鈥淚f we head into next spring with borrowing costs down around four per cent, things could get more interesting,鈥� he said.

The Bank of Canada鈥檚 next rate decision is Sept. 4, while the U.S. Federal Reserve next makes a rate announcement on Sept. 18.