A total of 5,428 properties were sold across the country in September, down from 7,352 sales in September 2016 and marking the lowest level for the month in six years, REINZ said.
The median number of days it took to sell a property increased to 34 from 31 in September 2016 while the number of auctions, which is generally an indicator of a heated housing market, slid 55 percent.
The steam is coming out of the country's heated property market after moves by the central bank to clamp down on the level of high LVR ratio mortgages amid concern rising prices were a risk to the nation's financial stability.
The latest figures may also have been impacted by wet weather and uncertainty around the general election, with some parties campaigning on reducing the record immigration levels which have stoked housing demand.
REINZ CEO Bindi Norwell
said: "The soggy start to spring combined with the 'election effect' has had a significant impact on the number of sales across the country - this is the lowest number of sales in eight months, and the lowest number of sales in the month of September for six years.
"It's not all doom and gloom as there are pockets of the country experiencing increases month-on-month and median prices are increasing in the majority of regions across the country."
The REINZ house price index edged up 0.7% in September from August to a record 2,699. All regions except Auckland, Taranaki and Canterbury reached a new high during September, indicating strong value growth across most of the country, the institute said.
"Prices across the country increased in all but three regions, evidence that the market continues to grow despite some challenging conditions - including the LVR restrictions and banks continuing to tighten lending conditions," Norwell said.
"Much of the increase has been driven by the buoyancy in the regions."
Property market on hold
Short-term losses up in property market
The number of property sales across the country dropped 26% last month, with all 16 regions recording a decline, according to the Real Estate Institute (REINZ).