Turning (Very) Slowly

Toronto’s housing market showed signs of strengthening in July. Sales dipped slightly but rose modestly after seasonal adjustment. New listings and active inventory edged lower yet remained near record highs, while benchmark and average prices continued their gradual decline, holding well below peak levels. The rental market stayed soft despite a slight uptick in rents. Housing starts and completions fell sharply, and new home sales remained near historic lows. Mortgage rates nearly converged, with affordability largely unchanged. At the same time, unemployment edged down across all regions, while mortgage arrears held steady at elevated levels.

Toronto Metro sales edged down to 6,100 in July, however, increased by 13% after seasonal adjustment. They declined 2% month-over-month, but rose 13% year-over-year, and remained 17% below the 10-year average. Sales activity typically slows down between May and January.

New listings declined in July to 17,613, down 11% month-over-month, yet still 8% higher year-over-year and 21% above the 10-year average. This marked one of the highest July listing levels on record, nearly matching the peak seen in July 2020. New listings typically decline between May and December.

Active inventory declined slightly in July, falling to 30,215 units – a 4% monthly decrease. Despite the decline, inventory remained 27% higher year-over-year and 70% above the 10-year average, marking the highest July level on record since at least 2006. Typically, active inventory declines between May and December.

In July, the market balance indicator, measured by months of inventory, edged down slightly to 5, but remained 83% above the 10-year average. Despite improvement, this was the weakest reading for this month since at least 2006, with condos remaining weaker than the overall market. Historically, this level of the indicator has been associated with an annual price decline of around 10%.

Another market balance indicator, the sales-to-new listings ratio, rose to 0.35 in July but remained 32% below the 10-year average. This marked one of the weakest July readings, nearly matching the record low observed in July 2024. Historically, this ratio has corresponded with an annual price decline of around 15%.

In July, the benchmark price representing a typical property declined by 1.4% month-over-month to $981,000, while the median and average prices softened considerably. The benchmark price was down 5% year-over-year and remained 23% below the 2022 peak.

Toronto Metro’s rental market weakened further in June after seasonal adjustment. The market balance indicator, months-of-inventory, held steady at 1.63, 54% above the 10-year average. June marked the weakest rental performance for the month since at least 2012, excluding the pandemic period. The rental market typically strengthens between December and August.

In June, the average rent in Toronto Metro inched up to $2,841, down 5.2% year-over-year and 9% below the 2023 peak. Rent prices typically trend upward between January and August.

New home sales rose to 510 units in June, but remained 80% below the nine-year average. The 12-month running total fell to 5,840 units, an 80% drop from the historical norm, marking the lowest annual sales level on record since at least 2016.

In June, the high-rise benchmark price rose 0.7% month-over-month to $1,028,527, marking a 1% increase year-over-year and remaining 18% below its peak. Meanwhile, the low-rise benchmark price edged up 0.3% to $1,510,126, showing a 6% year-over-year decline and staying 22% below its peak.

Housing starts in Toronto Metro dropped sharply in June to 1,701 units – 55% below the 10-year average. Annual construction also declined, with the 12-month total falling to 27,764 units, 30% below the historical norm.

Housing completions declined in June, totalling 2,179 units – 6% below the 10-year average. Over the past 12 months, 35,648 units were completed, standing 1% above the historical norm.

In July, the lowest 5-year fixed mortgage rate rose slightly to 3.94%, while the lowest 5-year variable rate edged down to 3.95%. The gap between the two narrowed to just 0.01 percentage points.

Housing affordability in the Toronto Metro remained relatively steady in July, with mortgage payments on a newly purchased property still requiring 50% of a typical household’s income.

In June, Ontario’s unemployment rate fell slightly to 7.8%, reflecting an 11% annual increase and standing 16% above the 10-year average. Nationally, the rate dipped to 6.9%, exceeding the 10-year norm by 4%. In Toronto, the unemployment rate edged down to 8.7%, standing 17% above the 10-year average.

In April, Ontario’s mortgage arrears rate held steady at 0.2%, reflecting a 54% year-over-year increase and standing 85% above the 10-year average. Nationally, the rate remained at 0.22%, marking a 22% annual increase and matching the 10-year average.