Is the GTA’s New Home Market in Recovery Mode?

The Greater Toronto Area’s new home market may be turning the corner after getting walloped by higher interest rates over the past year.

By Josh Sherman | 2 minute read

Like they did with the resale market, rising interest rates affected the new home segment throughout the Greater Toronto Area, resulting in lower sales and prices over the past year.

New home sales in the Greater Toronto Area are bouncing back, but overall they still remain far lower than the long-run average, newly published data suggest.

In April, 2,391 new homes of all types were sold, according to the Building Industry and Land Development Association (BILD), which cites data from Altus Group, a global real estate company. While April’s sales volume is down 35% compared to the same period last year and 30% lower than the 10-year average, it represents a less pronounced decline than in previous months. In March, for example, sales declined 70% on a year-over-year basis and plunged 65% under the 10-year average. “The market is adjusting to higher rates and population growth is creating demand,” says Justin Sherwood, BILD’s senior vice president of communications and stakeholder relations, in an email statement provided to Wahi.

In the single-family home segment — which includes detached, linked, and semi-detached homes as well as non-stacked townhouses — sales totalled 1,064, soaring 81% above year-ago levels although sticking 16% under the 10-year average. Meanwhile, the benchmark price for a new single-family home was $1,768,456, a 1.1% decline from April 2022. The benchmark price excludes projects with extremely high or low pricing and includes units in the pre-construction phase as well as those under construction and completed.

“Sales of new homes may have been muted for the past few months due to short-term market conditions, but demand will inevitably return as GTA families resume looking for the homes they need,” adds Dave Wilkes, BILD’s president and CEO, says in a news release.

Meanwhile, there were 1,327 new condo sales in April, equalling a 57% collapse from a year ago and also clocking in at 39% lower than the average over the past decade. Condos could be units in low-, mid- or high-rise buildings or lofts or stacked townhouses. The benchmark price of a new condo, which was $1,102,904, fell 7.3% annually.

With sales remaining in the shadow of longer-term norms, the inventory of new homes edged higher, with 14,928 units on the market last month, including 13,588 condos and 1,340 single-family homes. Based on current sales activity, it would take 10.5 months for all available condo units to sell out if no new homes were added and six months to unload the entire inventory of single-family homes. BILD suggests nine to 12 months of inventory reflects a balanced market. 

Economists have warned that Canada isn’t building enough homes, including in the GTA, where many newcomers to the country settle. In the BILD news release, Wilkes echoed the sentiment, suggesting municipalities need to stay laser-focused on getting more new housing built: “Failure to do so will simply result in inflationary pressures to the cost of new homes returning.”