A Tentative Turn

In February, Toronto Metro sales began to strengthen, which is typical for this time of year, as sales usually increase from January to May. They rose to 3,868, up 26% month-over-month, down 4% year-over-year, and 39% below the 10-year average. Despite the increase, this represented the lowest February sales volume since at least 2006.

New listings dipped to 10,705 in February, down 1% month-over-month, 11% year-over-year, and 5% below the 10-year average. As listing activity typically rises from January through May, the decline was unusual.

Active inventory rose to 19,314 units in February, up 7% month-over-month, 1% lower year-over-year and 66% above the 10-year average. Notably, this marked the first time since July 2023 that active inventory fell below its year-ago level. The number of active listings typically increases from January through May.

In February, the market balance indicator, measured by months of inventory, fell to 5.0, 122% above the 10-year average. This marked the weakest February reading since at least 2006, excluding the 2008 financial crisis. Historically, this level has been associated with annual price declines of approximately 8%. Condominiums continued to underperform the broader market.

Another market balance indicator, the sales-to-new listings ratio, rose to 0.36 in February, remaining 36% below the 10-year average. This represented one of the weakest February readings on record. Historically, this ratio was associated with annual price declines of around 12%.

In February, the benchmark price for a typical property increased 0.3% month-over-month to $938,800, while the median and average prices also edged up. Overall, prices remained 6–8% lower year-over-year and 24–28% below 2022 peaks.

Toronto Metro’s rental market showed signs of seasonal tightening in January. The market balance indicator, rental months of inventory, fell to 2.54, though it was up 5% year-over-year and 33% above the 10-year average. The rental market typically strengthens between January and August.

In January, the average rent in Toronto Metro fell to $2,711, down 3.7% year-over-year and 13% below the 2023 peak. Rents usually climb from February through August.

New home sales rose to 269 units in January, remaining 81% below the nine-year average. The 12-month total fell to 4,636 units, standing 83% below the historical norm and extending the ongoing 24-month streak of below-average annual sales.

In January, the high-rise benchmark price rose 0.6% month-over-month to $1,027,486, increasing 1% year-over-year and remaining 18% below its peak. Meanwhile, the low-rise benchmark price declined 0.9% to $1,397,358, down 10% year-over-year and 28% below its peak.

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In January, housing starts in the Toronto Metro fell to 2,312 units, standing 20% below the 10-year average. Over the past 12 months, total starts fell to 26,031 units, 33% below the historical norm.

Housing completions decreased to 1,419 units in January, standing 49% below the 10-year average. Over the past 12 months, 35,015 units were completed, 1% below the historical norm.

In February, the lowest five-year fixed mortgage rate remained unchanged at 3.64%, while the lowest five-year variable rate decreased by 0.05 percentage points to 3.35%, widening the gap between the two to 0.29 percentage points.

Housing affordability in the Toronto metropolitan area remained steady in February. Mortgage payments on a newly purchased typical property consumed 44% of median household income, unchanged from the previous month.

Ontario’s unemployment rate fell to 7.3% in January, reflecting a 4% year-over-year decrease and standing 8% above the 10-year average. Nationally, the rate fell to 6.5%, remaining 2% below its 10-year average, while in Toronto it fell to 7.9%, remaining 5% above its 10-year average.

In November, Ontario’s mortgage arrears rate held steady at 0.26%, reflecting a 44% year-over-year increase and standing 130% above the 10-year average. Nationally, the rate remained at 0.25%, representing a 19% annual increase and staying 14% above the 10-year average.