Real estate sales are down and housing starts are up, putting Chilliwack squarely in a buyer's market.

There were 151 single family homes sold in June with an average sale price of $362,000, down from 171 in May and 165 in June 2009.

Total residential sales for June dropped to 224 from May's 248 home sales. Total sale are down from a year ago, when 250 were sold in June 2009, the first month of recovery after the economic downturn.

While the implementation of the Harmonized Sales Tax (HST) has little effect in Chilliwack, the Chilliwack and District Real Estate Board (CADREB) has blamed lower sales on HST uncertainty.

"The truth is, as the majority of homes for sale in Chilliwack and area are under the HST threshold, it only minimally affects the price, if at all," said CADREB president Kyle Hislop.

HST is only applied to new homes over $525,000. The average price of a home in Chilliwack dropped from $352,000 to $344,000, according to Hislop.

Sales typically slow down in summer and despite new lending rules that may keep some first-time homebuyers out of the market, CADREB says the market is good for buying.

"Combined with continued low interest rates, it is an excellent time to shop for a first home, a move-up or an investment property," Hislop said in a press release.

The B.C. Real Estate Association's (BCREA) second quarter housing forecast suggests an improving economy may counter-balance some of the erosion in affordability caused by higher mortgage interest rates and tighter lending rules. The BCREA also suggests stronger economic and employment growth in 2011 will bolster housing demand and push home sales higher.

BCREA predicts a 2.9-per-cent increase in sales for 2010 to 2,340 total sales up from 2,274 in 2009.