Structural changes needed to boost new home market rebound: BILD

Greater Toronto Area (GTA) new home sales remained low in September, with slight price reductions and high, stable levels of available inventory, according to the Building Industry and Land Development Association (BILD).

There were 591 new home sales in September, which was down 69 per cent from September 2023 and 76 per cent below the 10-year average, according to Altus Group, BILD’s official source for new home market intelligence.

Off the sidelines

“GTA new home sales had another slow month in September 2024, despite three successive Bank of Canada rate cuts,” says Edward Jegg, research manager with Altus Group. “We now have a market that is highly primed with elevated inventories, falling prices and a further 50 basis point rate cut. All that is needed is for buyers to jump off the sidelines.”

Condominiums, including units in low-, medium- and highrise buildings, stacked townhouses and loft units, accounted for 247 units sold in September, down 81 per cent from September 2023 and 85 per cent below the 10-year average.

There were 344 single-family home sales in September, down 41 per cent from September 2023 and 58 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 slightly compared to the previous month, to 21,871 units. This includes 17,427 condominium apartment units and 4,444 single-family dwellings. This represents a combined inventory level of 13.8 months, based on average sales for the last 12 months. This remains a high months of inventory level (based on sales), however, the actual number of units maintains the trend seen since autumn 2023 of actual inventory levels near or just above the 20,000-unit mark.

Cost to build crisis

“There is a ‘cost to build’ crisis in the GTA,” says Justin Sherwood, senior vice-president of communications and stakeholder relations at BILD. “With land, labour and material prices being what they are, it is very difficult to build a new home at a cost that the market will readily absorb – and this issue is manifesting itself in the form of low sales and therefore lower housing starts in the GTA.

“Government fees and taxes comprise 25 per cent of the cost of an average home in the GTA. This is why BILD has been calling on governments to do something about lowering added fees and costs to help address affordability and to ensure that there is adequate supply of new housing available as buyers begin to return to the market as interest rates continue to decline.”

Benchmark prices decreased slightly in September for both single-family homes and for condominium units compared to the previous year. The benchmark price for new condos was $1.02 million, which was down one per cent over the last 12 months, while new single-family homes it was $1.56 million, down 0.1 per cent.