The Toronto-area new home sales market hit “record-breaking” low sales in December, capping off the “worst year” for the city since 1990.
The Building Industry and Land Development Association (BILD) said in its Monday report there were 310 new home sales in December, which was down 46 per cent from December 2023 and 80 per cent below the 10-year average, according to Altus Group, BILD’s source for new home market data.
In 2024, there were 9,816 new home sales — down 47 per cent from 2023 and 69 per cent below the 10-year average.
“2024 will go down as a historic year, with December’s new home sales hitting their lowest point in nearly 40 years and the whole year producing the lowest annual total since 1990,” Edward Jegg, research manager at Altus Group said in the report. December 2024 was the lowest December sales ever recorded since 1981.
Condos which include units in low, medium and highrise buildings, accounted for 150 units sold in December, down 63 per cent from December 2023 and 86 per cent below the 10-year average.
Single-family homes fared better with 160 homes sold in December, down one per cent from the same time last year, and 62 per cent below the 10-year average.
Total new home remaining inventory decreased slightly in December 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 months, down from 14.1 months in November. A healthy market level is around nine to 12 months.
“We are literally watching the foundation of the next housing crisis being laid today. December’s new home sales and the low new home sales seen throughout 2024 in the GTA illustrate the problem the region is facing adding new housing supply,” said Justin Sherwood, BILD’s senior vice-president of communication, research and stakeholder relations.
While the resale market (existing supply) has shown “some signs of life” due to lower interest rates, Sherwood said, new builds are facing a “cost-to-build” challenge.
Construction costs, financing rates and municipal fees have all skyrocketed over the last five years, passing on the cost to the consumer and limiting profitability for the builders.
“As 2025 begins, new home buyers remain unwilling to re-enter the market despite lower mortgage rates, falling prices and elevated inventories,” as the cost-per-square-foot basis is still too high.
While a record number of new units are coming to the market this year, supply is projected to fall substantially in the coming years as builders and purchasers take a back seat.
Not only will it lead to a supply shortage that will force rapid price appreciation but there is an economic knock-on effect.
Over the last five years, the new home and commercial construction in the GTA has provided 235,000 jobs, $17 billion in wages, $61 billion in economic activity annually contributing to $30 billion in GDP, Sherwood said. But that could all take a major hit with the slowdown in sales and pre-construction.
“There will be a drop in tax revenue, construction employment and activity, which will cause a significant hit to the economic development in the area,” Sherwood said.
