Still Searching for Spark

Toronto’s housing market remained sluggish in June, with sales showing minimal change and staying well below longterm norms. New listings dipped slightly but stayed near historic highs, while inventory rose. Benchmark and average prices declined further, remaining well below peak levels. New housing starts and completions were strong, but new home sales remained near record lows. May rental data showed continued softness despite a slight rent increase. Economic signals were mixed: mortgage rates held steady, affordability improved slightly, arrears stayed high in Ontario, and unemployment continued to rise across all levels.

Toronto Metro sales edged down to 6,243 in June, but increased by 8% after seasonal adjustment. Despite the gain, it remained one of the weakest June sales levels on record, nearly repeating the low reached in June 2024. Sales showed no change month-over-month or year-over-year and remained 26% below the 10-year average. Sales activity typically begins to slow from May through January

New listings declined in June to 19,839, down 9% month-over-month, yet still 10% higher year-over-year and 16% above the 10-year average. This marked the highest number of new listings recorded in June since at least 2006. New listings typically begin to slow down after May.

Active inventory continued to grow in June, reaching 31,603 units, up 2% month-over-month, 34% year-over-year, and 72% above the 10-year average. This marked the highest active inventory level for any month on record since at least 2006. Active inventory typically slows down after May.

In June, the market balance indicator measured by months of inventory rose slightly to 5.1, signalling a continued deterioration in market conditions. 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 15%.

Another market balance indicator, the sales-to-new listings ratio, edged up slightly to 0.31 in June but remained 37% below the 10-year average. This was the weakest June reading since at least 2006. Historically, this ratio has corresponded with an annual price drop of around 17%.

In June, the benchmark price representing a typical property declined by 1.7% month-over-month to $995,100, while the median and average prices also saw modest declines. The benchmark price was down 6% year-over-year and remained 22% below the 2022 peak.

As June data was not yet available at the time of reporting, the latest insights reflect May conditions. Toronto Metro’s rental market saw a modest uptick in May but weakened after seasonal adjustment. The months-of-inventory indicator, which reflects market balance, declined to 1.63, standing 42% above the 10-year average. This is the weakest May reading since at least 2012, excluding the pandemic. Historically, the rental market tends to strengthen between January and August.

As June data was not yet available at the time of reporting, the latest insights reflect May conditions. In May, the average rent in Toronto Metro rose slightly to $2,818, down 4.6% year-over-year and 10% below the 2023 peak. Rent prices typically trend upward between January and August.

In May, new home sales inched up to 345 units yet remained 86% below the nine-year average. The 12-month running total fell to 6,669 units, a 77% drop from the historical norm. This marked the lowest annual sales level since at least 2016.

In May, the high-rise benchmark price rose 0.2% month-over-month to $1,021,339, marking a 2% decline year-over-year and remaining 18% below its peak. Meanwhile, the low-rise benchmark price fell 1.6% month-over-month to $1,505,539, showing a 7% drop from the previous year and staying 22% below its peak.

Construction began on 3,512 housing units in May, 22% above the 10-year average. Over the past year, 28,910 units were started in Toronto Metro, 27% below the historical average.

Housing completions surged in May, totalling 4,184 units 26% above the 10-year average. Over the past 12 months, 36,213 units were completed, standing 2% above the historical norm.

In June, the lowest 5-year fixed mortgage rate rose slightly to 3.89%, while the lowest 5-year variable rate remained steady at 3.99%. The gap between the two narrowed to 0.10 percentage points.

Housing affordability in the Toronto Metro improved slightly in June, with mortgage payments on a newly purchased property requiring 50% of a typical household’s income.

In May, Ontario’s unemployment rate rose to 7.9%, reflecting a 16% annual increase and standing 18% above the 10-year average. Nationally, the rate climbed to 7.0%, exceeding the 10-year norm by 6%. In Toronto, the unemployment rate edged up to 8.8%, standing 19% above the 10-year average.

In March, Ontario’s mortgage arrears rate held steady at 0.20%, reflecting a 54% year-over-year increase and standing 86% above the 10-year average. Nationally, the rate edged down slightly to 0.22%, marking a 16% annual increase but aligning with the 10-year average.