Toronto-area home prices dip almost 5% in May despite 'market tightening'

The spring market has remained slow but is performing better than last year, which recorded a 25-year low in sales.

“Spring sales have been stronger than last year, reflecting improved affordability stemming from lower selling prices and borrowing costs,” said TRREB president Daniel Steinfeld in a release.

Since the February 2022 peak, the average GTA sales price has dropped by almost 20 per cent.

Sales increased year over year in May by 6.3 per cent with almost 6,600 sales, the highest number of monthly sales in 18 months. 

“Sales are forecast to improve further as we move through the second half of this year. Recovery would be further bolstered by positive news on the trade front along with an easing of geopolitical tensions and related uncertainty.” 

On Friday, Statistics Canada reported that national GDP contracted for a second consecutive quarter, which means the country is in a technical recession, but many economists are pushing back as the economy doesn’t exhibit the broad-based weakness typically associated with a recession.

Despite last month’s boost, May sales were still below the 10-year average for the month, which is 9,104 sales.

“It’s still below the peak months during the pandemic but is higher than last year,” said TRREB chief information officer Jason Mercer, adding that May is typically the best month in the year for sales.

New listings dropped 18.9 per cent year over year indicating that inventory is being absorbed, with some neighbourhoods — typically those with fewer listings — likely seeing more competition between buyers.

The sales-to-new-listings ratio is 37 per cent, indicating a buyers’ market — where buyers have more choice and negotiating power. 

“Buyers continued to have substantial negotiating power through the spring, helping with affordability,” Mercer said. “Looking ahead, if sales strengthen further relative to listings, selling prices will level off and even start to grow as we move into 2027.”

In the GTA, sales were up the most for detached homes at 9 per cent year over year, followed by sales of townhomes rising by 4.8 per cent and condos by 4.2 per cent. Semi-detached homes saw a slight year-over-year sales drop of 0.8 per cent. 

Prices were down for all property types, with townhomes seeing the greatest price decline at 7.1 per cent year over year, followed by condos at 6.4 per cent, detached at 4.7 per cent, and semi-detached at 2.9 per cent. 

On a seasonally adjusted basis, May home sales were up by 10 per cent month over month compared to April, while new listings were down by 2.1 per cent.

“This should see the price trend flatten and ultimately trend upwards in the months ahead,” the report said. 

Because the average price has increased over the last three months, it shows the impact of the “market tightening” as sales increase and inventory decreases, Mercer said. 

“If that continues, it will support pricing and even an increase for 2027,” he said.