Home sales fall in Toronto, while prices rise for the first time since last summer
Toronto home prices rose in February, the first increase since last summer, but sales dropped 12 per cent after two straight months of growth – a sign that the country’s largest housing market is not quite on the rebound after last year’s slowdown.
The home price index, which excludes the highest priced transactions, reached $1,089,800 last month, according to the Toronto Regional Real Estate Board, or TRREB. That was 0.2 per cent higher than in January after removing seasonal influences.
Last month’s home price increase occurred after the Bank of Canada kept its benchmark interest at 5 per cent for five straight policy announcements.
The steady interest rate has given current mortgage holders time to adjust to the higher borrowing costs. At the same time, the central bank’s softer comments on further interest rates has given prospective homebuyers some confidence that borrowing costs will not become more expensive.
Real estate experts said the change in tone from the central bank has led to more activity. There is now even competition for some types of properties, such as houses.
Elan Weintraub, co-founder of Mortgage Outlet Inc., said there were 20 offers on one detached house in the Toronto suburbs in February. He said the house was listed for $1.1-million and sold for $1.4-million.
“Bidding wars are back,” he said.
Compared with a year earlier, the home price index is 1 per cent higher. The last time home prices were on the upswing was in the spring of 2023, after Bank of Canada had said it would take a break from hiking borrowing costs.
The bank’s next scheduled interest-rate announcement is this Wednesday, where it is expected to make no change. TRREB’s chief market analyst, Jason Mercer, said this would “add credence to the argument that we have reached the top of the interest-rate cycle.”
But Mr. Mercer said prospective buyers would need to see one to two interest-rate cuts before they “are comfortable moving back into the market.”
Last month’s sales were 11 per cent higher than February, 2023, when buyers started aggressively making purchases again. Mr. Mercer said the year-over-year increase in transactions was a sign that the market was starting to revive.
The number of detached house sales in the Toronto suburbs was more than triple the number of condo transactions. But in the city, the volume of condo purchases was about one-third higher than houses.
The number of new listings in February was flat compared with January.
This article was reported by The Globe and Mail
