While Toronto's real estate sales volume is significantly down over the same period in 2009, housing prices continue to rise, says the Toronto Real Estate Board.

In figures released Monday, the board said there were 2,790 sales through the Multiple Listing Service for the first two weeks of July.

That is a 37 per cent decrease from the 4,437 sales made in the first two weeks of July 2009.

"New listings decreased by eight per cent annually to 5,184," the board said.

Bill Johnston, the board's president, said in a news release that sales volume had spiked and were "unseasonably high" in the first four months of 2010.

He said transactions will be down year-over-year as sales levels balance out.

"With year-to-date sales up by more than 18 per cent compared to last year, we continue to look forward to one of the best years on record under the current TREB trading area," Johnston said.

In 2009, the real estate market started rebounding after the recession began in late 2008. Prices returned to previous levels early in 2009 and kept on growing.

The average price recorded for the first two weeks of this month was $427,931. That figure is eight per cent higher than the average of $394,750 recorded for the same period of July 2009.

"The average home selling price in the GTA will continue to grow on an annual basis in the second half," Jason Mercer, the board's senior manager of market analysis, said in a news release.

"Even with the pace of transactions slowing, there will be enough sales relative to listings to support sustainable rates of price growth."

The board didn't mention whether the HST is having a noticeable impact on real estate activity.

For example, real estate commissions are now subject to the HST. Previously, they were exempt from Ontario's old eight per cent Retail Sales Tax.

People buying new homes over $400,000 in value will have to pay the HST. Previously, such homes were exempt from provincial sales tax.

Those buying a new home valued under $400,000 get a rebate of up to $24,000 to keep the amount of HST payable the same as under the old sales tax regime. That rebate will also apply to homes valued over $400,000, but purchasers of those homes will pay more tax than in pre-HST times.

Mercer told CTV Toronto it's too soon to tell how much of an effect the HST is having on buying decisions.

He did say that many people made purchases this spring to beat out looming interest rate hikes and tightened federal mortgage eligibility rules.

On Tuesday, the Bank of Canada is considered likely to raise its key lending rate to banks by another 25 basis points, or one-quarter of a percentage point.

Some analysts expect that there might be one or two more small interest-rate hikes this years, Mercer said.

People should remember that home affordability rests on purchase price, interest rates and the buyer's household income.

"The income that goes towards the average mortgage payment is still very low in historic terms," he said.