"I think some people are perhaps confused by the fact that we've seen a drop in sales but prices haven't fallen yet," said David Madani, an economist at Capital Economics.
"But that's normal because prices respond to sales activity with a lag," said Madani, who believes it's still too early to rule out a sharp correction in what until recently has been an overheated market.
"My expectation is that sales will continue to weaken, as they have been doing since the beginning of last year."
The real test will be the summer months when the housing market typically heats up, Madani added.
With employment contracting in the first quarter of the year and the tougher mortgage rules put in place last July by federal Finance Minister Jim Flaherty, Madani said he sees little reason why sales would "magically" rebound, as some bank economists are predicting.
"Prospective buyers are just stepping back, because they're afraid of what perhaps lurks for housing over the next couple of years," he said.
But Douglas Porter, chief economist at BMO Capital Markets, said the fact remains that prices are still rising faster than inflation, albeit at the slowest rate in more than two years.
"Despite the very loud gnashing of teeth and excessive wringing of hands for well over a year on the topic, Canadian home prices remain incredibly calm, cool and collected," Porter said in a note.
"The surprises on the sales data in recent months have consistently been on the high side of expectations, not the low side."
The Canadian Real Estate Association said Wednesday there were 47,997 homes sold in April, down from 49,553 a year earlier.
On a seasonally adjusted basis, April sales were up 0.6 per cent from March.
Gregory Klump, the real estate association's chief economist, said the Easter holiday and an additional weekend in March likely hurt that month's sales, making April look better by comparison.
"Since changes to mortgage rules made in 2012 took effect, national sales have been running nine to 10 per cent below levels posted in the first half of 2012, but they’ve been remarkably steady," Klump said in a statement.
In Toronto the number of homes sold fell 5.2 per cent compared with April last year, while in Vancouver sales fell six per cent from a year earlier.
Home sales in Regina fell by 24.2 per cent from a year ago, while those in Saint John, N.B., were down 21.1 per cent.
Calgary saw a 10.4 increase in house sales compared with April 2012, and home sales in Windsor-Essex in southwestern Ontario climbed 20.6 per cent year-over-year.
Meanwhile, CREA's home price index rose 2.2 per cent in April from the same month last year, the smallest 12-month gain in more than two years.
The national average price in April was $380,588, up 1.3 per cent from a year earlier in April 2012.
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