Stalled at Low Tide

In December, Toronto’s housing market showed typical seasonal softness. Home sales fell sharply and remained below historical norms, while new listings and active inventory also declined but stayed above long-term averages. Market balance indicators pointed to ongoing weakness, with prices continuing to ease. The rental market softened, while new-construction activity remained depressed, though housing starts rebounded modestly and completions fell. Financing conditions were mixed, leaving affordability unchanged at strained levels. Unemployment rates improved, but mortgage arrears in Ontario continued to rise. Overall, the market remains defined by subdued demand, elevated supply, and persistent affordability pressures, with little evidence of a sustained recovery.

In December, Toronto Metro sales continued to weaken, which is not uncommon for this time of year, as sales usually decline between May and December. Sales fell to 3,697, down 26% month-over-month, up 10% year-over-year, and 18% below the 10-year average. After seasonal adjustment, sales were unchanged.

New listings fell to 5,299 in December, down 52% month-over-month but up 13% year-over-year, and 12% above the 10-year average. The decline aligns with typical seasonal patterns, as activity typically slows from May through January except for September’s uptick.

Active inventory fell to 17,005 units in December, down 31% month-over-month. It was 10% higher year-over-year and 72% above the 10-year average. The decline aligns with typical seasonal trends, as listings generally ease from May through January except for September’s slight uptick.

In December, the market balance indicator, measured by months of inventory, fell to 4.6, 85% above the 10-year average. This was among the weakest December readings since at least 2006, excluding the 2008 financial crisis, with condos continuing to underperform the broader market. Historically, this level has been associated with annual price declines of about 3%.

Another market balance indicator, the sales-to-new listings ratio, rose to 0.70 in December, remaining 28% below the 10-year average. This increase aligns with typical seasonal patterns. Historically, this ratio has been associated with annual price declines of around 7%.

In December, the benchmark price for a typical property declined 1.0% month-over-month to $942,300, while the median and average prices also edged down slightly. Overall, prices remained 6–9% lower year-over-year and 25–29% below 2022 peaks.

Toronto Metro’s rental market continued to soften in November, though it showed slight improvement after seasonal adjustment. The market balance indicator, rental months of inventory, rose to 2.65, 40% above the 10-year average, marking the weakest November rental performance. Typically, the rental market softens from August through December.

In November, the average rent in Toronto Metro fell to $2,774, down 5.2% year-over-year and 11% below the 2023 peak. The decline follows typical seasonal patterns, with rents generally easing from August through January.

New home sales declined to 510 units in November, standing 81% below the nine-year average. The 12-month total fell to 4,784 units, extending the ongoing 22-month streak of below-average annual sales.

In November, the high-rise benchmark price fell 0.9% month-over-month to $1,022,927, up 1% year-over-year but still 18% below its peak. Meanwhile, the low-rise benchmark price declined 1.2% to $1,416,638, down 9% year-over-year and 27% below its peak.

In November, housing starts in Toronto Metro rose to 2,051 units, 36% below the 10-year average. Annual construction edged down, with the 12-month total falling to 24,605 units, 36% below the historical norm.

Housing completions declined to 1,586 units in November, standing 32% below the 10-year average. Over the past 12 months, 38,234 units were completed, remaining 7% above the historical norm.

In December, the lowest 5-year fixed mortgage rate increased by 0.15% to 3.84%, while the lowest 5-year variable rate declined by 0.05% to 3.40%, widening the gap between the two to 0.44 percentage points.

Housing affordability in the Toronto Metro remained unchanged in December, with mortgage payments on a newly purchased typical property continuing to consume 45% of a median household income.

Ontario’s unemployment rate declined to 7.3% in November, , reflecting a 5% year-over-year decrease and standing 8% above the 10-year average. Nationally, the rate fell to 6.5%, 2% below the 10-year average, while in Toronto, it edged down to 8.4%, remaining 12% above its 10-year average.

In September, Ontario’s mortgage arrears rate rose to 0.25%, reflecting a 47% year-over-year increase and standing 125% above the 10-year average. Nationally, the rate held at 0.24%, representing a 20% annual increase and remaining 10% above the 10-year average.