Toronto-area new home sales just tanked to their worst year on record.
The situation is ”absolutely dire,” said the Building Industry and Land Development Association (BILD) in a Thursday report, noting the consequences are rippling through Ontario’s economy, which relies heavily on homebuilding for employment, future housing supply, and economic growth.
“GTA new home sales in December 2025 reached an all-time low, bringing a fitting close to 2025. Never in the 45 years that new home sales data have been collected for the GTA have we seen just 5,300 sales for an entire year,” said Edward Jegg, research manager at Altus Group, BILD’s source for new home market data.
“Meanwhile, 2026 is likely to see geopolitical concerns linger, prices remain elevated and the Bank of Canada has indicated the cycle of interest rate cuts has ended — thus the main drivers of buyer hesitancy are expected to drag on well into the year.”
The new-build sector has reached the bottom in terms of sales, but it’s unclear for how long they will remain at these historic lows, experts say.
The longer the market remains depressed the worse the outcome for the economy as job losses mount, with up to 100,000 jobs in Ontario at risk, BILD says. With consumer confidence hitting rock bottom due to economic uncertainty from the U.S., it’s unlikely that the market will emerge from its slump any time soon, leading to hardly any new construction by the end of the decade.
While BILD and other industry leaders call for urgent action to bring down the cost to build and boost sales, a top economist is arguing the downturn is a necessary and inevitable correction from the pandemic sales frenzy that pushed prices and stretched affordability to its limits.
“It was never going to be painless getting affordability back to something close to normal,” said Douglas Porter, chief economist and managing director economics at BMO.
Inventory reaches highest level to date
There were 240 new home sales in December — which was down 24 per cent from December 2024 and 82 per cent below the 10-year average, according to BILD’s report.
Historically, new home sales for a typical December in the GTA would be 1,327 units based on the previous 10-year average.
The price for new condos was $1.02 million, remaining at a price floor, BILD said. And the price for new single-family homes was $1.4 million, which was down nine per cent over the last 12 months.
In 2025, total sales were 5,314, with new single-family home sales at 3,247, down 63 per cent from the 10-year average, while condominium apartment sales came in at 2,067, down 89 per cent from the 10-year average.
“I think the situation is absolutely dire,” said Justin Sherwood, chief operating officer of BILD.
“Pricing for condos has hit its floor, it’s been around $1 million now for a while, and single-family has come down from $1.5 million to $1.4 million but I can’t see it coming down much further.”
Inventory reached the highest level seen to date, the report said.
Total new home remaining inventory in the GTA decreased slightly in December compared to the previous month, to 20,849 homes.
The inventory level — the time it would take to sell inventory on the market based on current demand — is 26 months. A healthy market level is around nine to 12 months.
Condo cancellations rack up
The BILD data comes on the heels of an Urbanation report on the Greater Toronto and Hamilton Area that found a record number of cancellations, and pointing to a lack of supply coming online by the end of the decade.
Last year saw a record number of cancellations with 28 condo projects with a total of 7,243 units scrapped — representing more than double the 3,469 units cancelled in 2024 and twice as many as the previous record of 3,598 units cancelled in 2018, according to the real estate research firm’s Wednesday report.
Meanwhile, just 10 new condo projects launched in 2025.
The lack of sales will impact new units coming to the market in the next few years. While 2025 saw completions of more than 29,200 units (just shy of the record 29,900 units in 2024), it will drop to just over 1,000 unit completions in 2029.
“It’s really sort of alarming to see that by the time we get to the end of this decade, we’re basically not building anything,” Shaun Hildebrand, president of Urbanation, said in an interview.
Because there is also record supply entering the market from the presale boom during the height of the pandemic, the number of units on the market is far outpacing demand, which has shrunk as immigration slows and consumer confidence takes a hit from the U.S. trade war.
There’s also excess inventory of resale condos (condos that were previously bought) that cost considerably less — the average sales price of a resale condo is $628,000, according to the Toronto Regional Real Estate Board — than the average new condo, which is around $1 million.
To bring prices down for end-users, land values and construction costs have to come down, and development charges and HST eliminated on all new homes, said Daniel Foch, chief real estate officer of Valery.ca, an AI-powered real estate brokerage and technology platform.
Development charges — what developers pay to the municipality — alone can bring down the cost of a unit by as much as 20 per cent, he said.
“If I can drop prices by 20 per cent tomorrow because Mayor Olivia Chow removed development charges on condos, that’s the most material difference that we’ll see,” he said, adding that it will do more than a drop in land value costs, which are just five per cent of the total cost of building a unit.
“If land costs come down 50 per cent, which they have, it only changes what I can sell the unit for by, you know, 50 bucks a foot. If development charges go away, it changes it by 200 bucks a foot.”
Foch warned that if all levels of government do not provide incentives to bring down the cost of building, it could take the new build sector a decade to return to normal levels of construction.
Jobs on the line
Around 100,000 construction jobs are at risk if the sales slump is prolonged, said Sherwood.
Altus Group estimates that on average over the past five years there have been more than 220,000 jobs supported in the economy from new home building alone.
If construction spending drops in the next five years by around $20 billion, then 50,000 construction jobs are lost with another 50,000 jobs cut for suppliers and other professionals (materials providers, window manufactures, architects).
“New home construction is a cornerstone of our economy, yet it has effectively stalled,” Sherwood said. “Now is the time to eliminate the HST on all new homes to lower the cost of housing and get buyers back into the market and the industry back to work.”
At the 2021 peak, 10 per cent of Ontario’s economy relied on home construction. Now it’s below seven per cent, said BMO’s Porter.
“It’s an important part of the economy, no doubt about it,” he said, adding Ontario is seeing the most pronounced real estate market slump compared to other provinces. That’s in large part due to the high cost of housing and the concentration of newcomers in the GTA.
“B.C. is a light version of Ontario, but if you speak to people in Quebec or Alberta about a housing correction, they don’t know what you’re talking about,” he said.
“It’s very much the Ontario story where we went from boom to bust.”
While the sales numbers are concerning, Porter said, the sky-high affordability challenges reached during the pandemic were unsustainable.
“I think you have to let the market sort itself out and make sure we get into a situation where things are affordable again, which will set up a better foundation going forward for the industry as a whole.”
