GTA new home market awaits rate relief

Greater Toronto Area (GTA) new home sales remained slow in May, and year-to-date sales from January to May are also sitting at a record-breaking low at 39 per cent below January to May 2009, the Building Industry and Land Development Association (BILD) reports.

There were 936 new home sales in May, which was down 71 per cent from May 2023 and 71 per cent below the 10-year average, according to Altus Group, BILD’s official source for new home market intelligence.

Additional relief required

“New home sales across the GTA continued to languish in May under the weight of elevated prices and high interest rates,” says Edward Jegg, research manager with Altus Group. “Despite the rate drop earlier this month, additional relief will be required to coax prospective buyers back into the market.”

Condominium apartments, including units in low-, medium- and highrise buildings, stacked townhouses and loft units, accounted for 539 units sold in May, down 75 per cent from May 2023 and 75 per cent below the 10-year average.

There were 397 single-family home sales in May, down 65 per cent from May 2023 and 61 per cent below the 10-year average. Single-family homes include detached, linked and semi-detached houses and townhouses (excluding stacked townhouses).

Total new home remaining inventory increased compared to the previous month, to 20,427 units. This includes 16,845 condominium apartment units and 3,582 single-family dwellings. This represents a combined inventory level of 14.5 months, based on average sales for the last 12 months.

Flashing check engine light

“The continuing record lows in new home sales is a flashing check engine light on the dashboard,” says Justin Sherwood, senior vice-president of communications and stakeholder relations at BILD. “Today’s sales are tomorrow’s starts. It is inevitable that we are entering further tight supply conditions in the next two to three years. Not only are high interest rates keeping buyers on the sidelines, but higher rates are making financing for new projects more difficult and expensive. When combined with higher construction costs, land costs and material costs and increasing government fees and taxes, the new home industry in the GTA is slowing down precipitously and new home supply in the 2025-27 time period will reflect this. To avoid future lack of supply driven price appreciation, we need all parties, all levels of government, (Canada Mortgage and Housing Corp.) and the industry to sit down and arrive at collaborative solutions that will support those seeking to call the GTA home.”

Benchmark prices decreased in May for both single-family homes and for condominium apartments compared to the previous month. The benchmark price for new condominiums was $1.04 million, down five per cent over the last 12 months, while for new single-family homes it was $1.61 million, down seven per cent.