Slipping Further

Toronto’s housing market continued to soften across multiple segments, as sales and new listings fell while active inventory remained elevated. Home prices declined across all measures, and housing starts and completions stayed subdued, reflecting slower construction and weak annual trends. Mortgage rates eased slightly, offering modest affordability relief, while the rental market remained historically weak, tightening only marginally with rents largely unchanged. Unemployment and mortgage arrears edged higher locally and provincially, though national metrics remained stable. Overall, the market was characterized by abundant supply, weaker demand, and ongoing pressure on prices.

Toronto Metro sales fell to 5,211 in August, down 2% after seasonal adjustment. Sales dropped 15% month-over-month but rose 5% year-over-year, remaining 27% below the 10-year average. Activity typically eases from May through January.

New listings declined to 14,038 in August, down 20% month-over-month, but remained 12% higher year-over-year and 11% above the 10-year average. This marked the highest August level since at least 2006, excluding the pandemic years. Listings typically begin to ease between May and January.

Active inventory dropped to 27,495 units in August, down 9% month-over-month. Despite the pullback, levels were still 21% higher year-over-year and 68% above the 10-year average – the highest August since at least 2006. Active inventory typically declines between May and January.

In August, the market balance indicator, measured by months of inventory, inched up to 5.3. This was the highest August reading since at least 2006, with condos weaker than the overall market. Historically, this level has been linked to annual price decline of about 12%.

Another market balance indicator, the sales-to-new listings ratio, rose to 0.37 in August but remained 35% below the 10-year average. This marked the weakest August reading since at least 2006. Historically, this ratio has corresponded with an annual price decline of around 13%.

In August, the benchmark price representing a typical property declined by 1.2% month-over-month to $969,700, while the median and average prices also softened considerably. Overall, prices were 4-5% down year-over-year and 23-26% below 2022 peaks.

Toronto Metro’s rental market strengthened in July, with months of inventory falling to 1.33 still 38% above the 10-year average. July marked the weakest rental performance for this month since at least 2012, excluding the pandemic period. The rental market typically strengthens between December and August.

In July, the average rent in Toronto Metro inched down to $2,835, down 4.8% year-over-year and 9% below the 2023 peak. Rent prices typically trend upward between January and August.

In July, new home sales fell to 359 units, remaining 79% below the nine-year average. The 12-month total declined to 5,545 units, marking the lowest annual sales level on record since at least 2016 and continuing an 18-month streak.

In July, the high-rise benchmark price rose 0.1% month-over-month to $1,029,527, marking a 1% year-over-year increase and remaining 18% below its peak. Meanwhile, the low-rise benchmark price fell 1.4% to $1,488,940, showing a 6% year-over-year decline and staying 23% below its peak.

Housing starts in the Toronto Metro rose in July to 1,720 units, 54% below the 10-year average. Annual construction continued to decline, with the 12-month total falling to 23,961 units, 39% below the historical norm.

In July, housing completions declined to 2,026 units, 36% below the 10-year average. Over the past 12 months, 33,229 units were completed, standing 5% below the historical norm.

In August, the lowest 5-year fixed mortgage rate dipped to 3.84%, while the lowest 5-year variable rate eased to 3.90%, widening the gap between them to 0.06 percentage points.

Housing affordability in the Toronto Metro improved in August, primarily driven by a decline in prices and mortgage rates. Covering mortgage payments on a newly purchased property in the Toronto Metro requires 49% of a typical household’s income, down from 50%.

In July, Ontario’s unemployment rate edged up to 7.9%, reflecting a 14% annual increase and standing 17% above the 10-year average. Nationally, the rate held at 6.9%, exceeding the 10-year norm by 4%. In Toronto, the unemployment rate rose to 9.0%, standing 21% above the 10-year average.

In May, Ontario’s mortgage arrears rate rose to 0.21%, reflecting a 50% year-over-year increase and 94% above the 10-year average. Nationally, the rate held at 0.22%, representing a 16% annual growth and aligning with the 10-year average.