The number of listings rose dramatically due to a number of factors:
1) people clamouring to get their house on the market trying to cash in before the drop (wether it really happens or not, it's too early to tell)
2) many properties artificially listed low for an offer date, trying to entice a bidding war in May, didn't sell as planned.  Most of these sellers then re-listed their house at a higher price.  This counts as a separate listing, hence the inflated MLS listing numbers.

I bought and sold in the past 3 weeks - I actually think it's a great time to buy as I don't believe the "downturn" we're feeling now is gonna last all that long.  We bought our long term house, so even a drop for a number of years is no big deal.  As for our sale of a small detached in the GTA - we listed at a price that we thought was fair market value.  It sold in 24 hours with multiple competing offers.  I think the days of artificially listing low are done