Sales of new builds continue to plummet with July recording an all-time low for the month with very few new project releases and steadily increasing months of inventory.
There were 654 new home sales in July, down 48 per cent from the same time last year and 70 per cent below the 10-year average, according to a Wednesday report from the Building Industry and Land Development Association (BILD).
“GTA new home sales in July 2024 sank to another record monthly low as buyers remained unwilling to leave the sidelines,” said Edward Jegg, research manager with Altus Group, BILD’s official source for new home market data.
“Further expected decreases in interest rates in the coming months along with elevated inventories means there will be plenty of opportunities once consumer confidence improves.”
Total inventory of newly built homes crept up in July due to ever-dwindling sales. There’s now 15 months of inventory — the time it would take to sell inventory based on current demand — on the market.
“Inventory is increasing not because we’ve added more units but because sales are decreasing,” Justin Sherwood, senior vice-president, communications and stakeholder relations at BILD. He said construction has halted as pre-sales are down significantly and that’s going to lead to a shortage down the road.
“It’s building pent-up demand, because people will return to the market when interest rates go down. It will take longer for new construction to recover creating an unhealthy imbalance of supply and demand.”
Many new construction projects likely won’t kick off again until inventory in the resale market drops, which is also experiencing a glut of inventory as high interest rates keep buyers away. Consumers tend to look into preconstruction when there’s limited housing stock available, Sherwood said.
Condominium apartments — including units in low, medium and highrise buildings, as well as stacked townhouses and loft units — accounted for 287 units sold in July, down 67 per cent from July 2023 and 81 per cent below the 10-year average.
There were 367 single-family home sales in July, down one per cent from the same time last year but 42 per cent below the 10-year average.
“Single family is performing somewhat better,” Sherwood said. “Part of that is there’s so much inventory of condos out there in the resale market. There’s a lot of choice for consumers that needs to trickle through.”
The Bank of Canada has begun lowering its key interest rate with two consecutive rate cuts this summer, and economists forecasting another two rate drops by the end of the year. While that will help boost some movement in the market, all levels of government could be more proactive, the report says.
“The numbers represent a clear picture and signal the need for an urgent response by government,” Sherwood said in the report.
“Changes in interest rates will not solve what is an ongoing structural problem, particularly evident in the GTA. The cost to build, driven by excessive government fees and taxes, is simply too high. Without immediate action by government, new construction activity will continue to slow and the GTA’s housing shortage will reach unprecedented levels over the next few years.”
