In the past few months, however, the housing market has begun to slow in response to rising interest rates. Since March, the Bank of Canada has raised its policy interest rate by 175 basis points — the equivalent of 1.75 percent — in an effort to contain inflation. “You do see some households take a bit of a step back as they have to reposition themselves in the market,” Mr. Mercer said. “It may be they need to find a less expensive home, a different location, or time to save up more of a down payment.”

Added Mr. Powell, “We’re in a pause — things have changed a lot in the last month.”

The real estate board reported 7,283 sales in the greater Toronto area in May, down 39 percent from May 2021, and down 9 percent from the previous month. The overall average selling price for all property types was 1.21 million Canadian dollars ($962,000), down roughly 7 percent over the previous two months.

The two trends suggest a more balanced market, which should allow for “a little more negotiating power for people still active in the marketplace,” Mr. Mercer said.

Toronto’s prime central neighborhoods, including Rosedale, Lawrence Park and Forest Hill, remain highly competitive, as they have a chronic dearth of available homes, said Cailey Heaps, the president and C.E.O. of the Heaps Estrin Team. According to the real estate board, a detached house in the city currently averages just under 2 million Canadian ($1.59 million), while a condo averages around 800,000 Canadian ($635,000).

In addition, the luxury market in general continues to perform “exceptionally well,” Ms. Heaps said. “Buyers understand the scarcity of the product they’re looking for.”

In Port Hope, the average selling price for the 38 homes sold in April and May was 909,000 Canadian ($723,000), a 28 percent increase over a year ago, according to Zolo, a real estate listing site.