Steady, For Now.

In September, Toronto’s housing market remained weak but relatively stable, with sales improving while new listings and active inventory stayed elevated. Market balance indicators were weak, putting continued downward pressure on prices, with benchmark prices edging lower. Rental prices declined slightly, though the rental market balance strengthened. New home sales fell to record lows and housing starts remained subdued, while completions rose sharply. Mortgage rates eased, supporting a modest improvement in affordability. On the economic front, national unemployment reached its highest level since 2016 outside the pandemic, while Toronto and Ontario rates edged lower, and mortgage arrears continued to rise, highlighting household financial strain. Overall, ample supply and muted demand kept prices under pressure, though market conditions are gradually improving.

Toronto Metro sales rose to 5,592 in September, up 2% after seasonal adjustment. Sales increased 7% month-over-month and 12% year-over-year but remained 21% below the 10-year average. Activity typically eases from May through January.

New listings surged to 19,260 in September, up 37% month-over-month and 6% year-over-year, standing 19% above the 10-year average. This marked the highest September level since at least 2006, excluding the pandemic years. The increase in new listings can be partially attributed to seasonality, as there is typically an uptick in September.

Active inventory rose to 29,394 units in September, up 7% month-over-month. It was 15% higher year-over-year and 61% above the 10-year average – the highest September since at least 2006. Seasonality partially explains the increase in active listings, which usually climb in September.

In September, the market balance indicator, measured by months of inventory, remained at 5.3, 80% above the 10-year average. This was the highest September reading since at least 2006. Historically, this level has been linked to annual price declines of about 8%. Condos remain weaker than the overall market but are showing relative improvement compared to other segments.

Another market balance indicator, the sales-to-new listings ratio, fell to 0.29 in September and remained 35% below the 10-year average. This decline was quite typical, marking one of the weakest September readings. Historically, this ratio has corresponded with an annual price decline of around 13%.

In September, the benchmark price representing a typical property declined by 1% month-over-month to $960,300, while the median and average increased slightly. Overall, prices were 4-5% down year-over-year and 21-25% below 2022 peaks.

Toronto Metro’s rental market strengthened in August but remained unchanged after seasonal adjustment. The market balance indicator, months of inventory, fell to 1.31, which is 33% above the 10-year average. September recorded the weakest rental performance for this month since at least 2012, excluding the pandemic period. Typically, the rental market strengthens from December through August and softens thereafter.

In August, the average rent in the Toronto Metro inched down to $2,812, down 5.2% year-over-year and 10% below the 2023 peak. Rent prices typically trend downward from August to January.

In August, new home sales fell to 300 units, standing 80% below the nine-year average. The 12-month total declined to 5,381 units, marking the lowest annual sales level on record since at least 2016 and continuing a 19-month streak.

In August, the high-rise benchmark price fell 0.1% month-over-month to $1,028,782, marking no change year-over-year and remaining 18% below its peak. Meanwhile, the low-rise benchmark price fell 1.8% to $1,462,342, showing a 9% year-over-year decline and staying 24% below its peak.

Housing starts in the Toronto Metro rose in August to 2,156 units, 40% below the 10-year average. Annual construction continued to decline, with the 12-month total inching down to 23,954 units, 39% below the historical norm.

In August, housing completions rose to 4,320 units, 26% above the 10-year average. Over the past 12 months, 34,601 units were completed, standing 2% below the historical norm.

In September, the lowest 5-year fixed mortgage rate dipped by 0.05% to 3.79%, while the lowest 5-year variable rate fell by 0.3% to 3.6%. This was the first time a variable mortgage rate declined below the fixed one since September 2022, with the gap between those two standing at 0.19 percentage points. The decline in variable rate was primarily driven by the 0.25% interest rate cut in September, performed by the Bank of Canada.

Housing affordability in the Toronto Metro further improved in September, with mortgage payments on a newly purchased home consuming 47% of a typical household’s income, down from 49%. While the market remains less affordable than its historical norm, conditions continue showing progress.

In August, Ontario’s unemployment rate edged down to 7.7%, reflecting a 5% annual increase and standing 14% above the 10-year average. Nationally, the rate rose to 7.1%, exceeding the 10-year norm by 7%. It reached the highest level since 2016 outside of the Pandemic. In Toronto, the unemployment rate eased to 8.9%, standing 19% above the 10-year average.

In June, Ontario’s mortgage arrears rate rose to 0.22%, reflecting a 57% year-over-year increase and standing 102% above the 10-year average, reaching its highest level since 2013. Nationally, the rate edged up to 0.23%, representing a 21% annual growth and standing 5% above the 10-year average.