The Toronto-area new homes market was “practically frozen with inaction” as sales remained low in October, with the condo sector particularly “hard hit.”
But conditions are finally right for a comeback, according to a data researcher for the building industry.
Condo apartments, which include low, medium, highrise buildings, as well as condo townhouses and lofts, accounted for 210 units sold in October — down a staggering 84 per cent from October 2023 and 91 per cent bellow the 10-year average, according to the Building Industry and Land Development Association’s (BILD) Friday report.
Condo prices also dropped by 1.6 per cent year over year.
“The GTA new home market remained practically frozen with inaction in October 2024,” Edward Jegg, research manager with Altus Group, BILD’s source for new home market data, said in the report.
“However, conditions are starting to align with inflation in check, resale activity surging, interest rates falling, and upcoming changes to mortgage rules all pointing to buyers jumping back into the new home market in the coming months.”
Recent data indicates buyers are entering the market again after a sluggish 2023 now that the Bank of Canada has had four consecutive interest rate cuts boosting home resales. It could bring buyers back into the new home space, BILD says, especially next year after more rate cuts.
New home sales for single-family homes performed better than condos with 555 single-family home sales in October, unchanged from October 2023 and 45 per cent below the 10-year average. Single-family homes include detached, semi-detached, and freehold townhomes. Prices dropped for single-family homes by 4.6 per cent year over year.
Total new home inventory increased slightly in October compared to the previous month. The inventory level — the time it would take to sell inventory on the market based on current demand — is 14.4 months, up from 13.8 months in September. A healthy market level is around nine to 12 months.
High interest rates and costs have resulted in weaker buyer demand, which is hampering future supply.
“Housing starts are the housing supply of tomorrow,” the report said, “and the longer that sales remain low the more it is anticipated that available housing supply in the 2027-2029 time period will suffer.”
With limited supply in the next few years, there will be increased competition putting upward pressure on prices, as demand outstrips supply.
As the real estate market continues to recover, BILD says builders in the GTA are grappling with rising construction costs, escalating government fees, taxes and charges, making it increasingly difficult to deliver new home prices at a cost the market can afford, said Justin Sherwood, senior vice-president communications, research and stakeholder relations at BILD.
“Only by getting the cost to build under control can we restart development and ensure a sustainable housing supply that meets market demand,” he said.
