GTA new home sales see a 50% record lower in Q1 of this year compared to 2023
Developers in the GTA experienced another slow month for new home sales in June, bringing year-to-date sales to less than half of the record-low seen in 2023, the Building Industry and Land Development Association (BILD) announced Wednesday.
The benchmark price for condos — an average price excluding outliers — was about $1.023 million, and for single-family homes it was about $1.613 million, according to the data collected by Altus Group. Prices declined by 6 per cent for both home types compared to the year before.
Overall, 1,139 new homes were sold last month, a 46 per cent drop compared to June 2023 and 59 per cent less than the 10-year average, the report said.
In total, there were 3,097 year-to-date sales, compared to 7,509 sales by the same time last year.
Justin Sherwood, the senior vice-president of communications at BILD, said building costs — including labour, materials, land prices and municipal fees — combined with slow approvals have led to limited affordability.
“What we’re seeing today in terms of sales is a direct reflection of the interest rates impacting the ability for a homeowner to carry those costs,” he said.
“We have price stickiness because inflation and input costs have gone up, and then you’ve got consumers sitting on the sidelines waiting for interest rates to come down.”
Building costs have skyrocketed in just a few years, Sherwood explained.
From the first quarter of 2019 to the last quarter of 2023, construction costs for single-family homes in the Toronto area increased 98.3 per cent and construction costs for condo apartments have increased 74.1 per cent, Sherwood said, citing an Altus Group report based on Statistics Canada data.
While interest rates remain high, the Bank of Canada cut its key overnight rate on June 5 to 4.75 per cent, the first cut in more than four years. Some economists, including RBC’s Nathan Janzen and Carrie Freestone, anticipate it will drop to four per cent by the end of the year.
This June, condo sales in particular took a hit as sales dropped 61 per cent compared to last June, with just 732 sales. Out of those, 589 were pre-construction sales, Altus Group data shows.
New single-family home sales, meanwhile, increased 5 per cent year-over-year to 607 sales.
The decline in pre-construction and new-build condo sales echoes the resale market, where the Toronto Regional Real Estate Board (TRREB) reported last week condo sales in the GTA were down by 28 per cent in June compared to the same time last year.
TRREB president Jennifer Pearce said in a statement that homebuyers appear to need many more interest rate cuts before getting back into the market.
Meanwhile, housing starts in the Toronto area plunged by 60 per cent that same month, compared to June 2023, the Canada Mortgage and Housing Corp. (CMHC) reported. The report said the decline was due, in large part, to a sharp drop in multi-unit construction, which includes condos, apartments, townhomes and semi-detached homes.
The decline was expected due to the higher interest environment catching up to developers, CMHC’s lead economist for the Toronto market, Jordan Nanowski, told the Star last week.
This article was first reported by The Star
