New home sales in GTA plummet, impacted by the high-interest rate and slow pre-construction sales

High interest rates and slow pre-construction sales in the Greater Toronto Area have sent new home sales into a record tailspin this year, the Building Industry and Land Development Association (BILD) reports.

 

Sales of new builds plummeted 56 per cent in April compared to last year and are 65 per cent lower than the 10-year average, according to BILD, which relies on Altus Group data.

 

BILD is calling on all levels of government for quick intervention.

 

“It’s concerning,” said Justin Sherwood, senior vice-president of communications and stakeholder relations at BILD. High interest rates and slow pre-construction sales, he said, have created a “critical situation for the future housing supply of the GTA and demands the attention of all levels of government to create the economic and investment climate to balance the market over the next several years.”

The government can’t control land prices or construction costs but they can increase density and speed up approvals, which is what BILD is urging them to do.

 

“Without action we are looking at an acute shortage of supply in two to three years,” Sherwood said.

 

Until that happens, it’s a good time to buy for those who can bear the high interest rates.

 

“With months of inventory at nearly a 15-year high and prices down year-over-year,” said Edward Jegg, research manager with Altus Group, “there are plenty of opportunities for those looking to buy a new home ahead of what is anticipated to be an increased demand once interest rates soften and buyers currently sitting on the sidelines return to the market.”

 

 

 

Total new home remaining inventory stood at 20,092 units last month. This includes 16,478 condo units and 3,614 single-family homes. This is one of the highest inventory levels for new properties in the last decade.

 

The benchmark price for a new condo unit in April was $1,056,786 — down four per cent year-over-year. The average condo measured 782 square feet and cost $1,351 per square foot.

 

The benchmark measures the average asking price of available new homes minus the extremes.

 

The benchmark price for a new single-family home was $1,617,896 — nine per cent lower than April last year.

 

 

 

This article was first reported by The Star