In July, the Greater Toronto area experienced a decrease in home sales on a month-to-month basis according to data released by the Toronto Regional Real Estate Board (TRREB). This decline of 1.7% in seasonally adjusted sales came after a surprise increase of 3.2% in June, marking the end of a four-month streak of decreasing home deals.
Average prices for homes in the Greater Toronto area saw a marginal increase of 0.2% last month, reaching C$1.13 million, the highest price point since December. At the same time, new listings were down by 0.8%, indicating a potential shift in market activity.
The rise in home prices has been attributed to increased demand in the market, fueled by expectations of further rate cuts from the Bank of Canada. With the central bank already reducing its key policy rate twice in two months, reaching 4.5% from a high of 5%, anticipation of additional cuts is driving consumer behavior.
Bank of Canada Governor Tiff Macklem has hinted at the possibility of further rate cuts if inflation continues to ease. Financial markets are already pricing in another 25 basis point reduction in borrowing costs for September, with a 25% chance of a larger 50 basis point cut. This expected decrease in borrowing costs could stimulate more activity in the housing market as buyers take advantage of lower mortgage payments.
Despite the month-over-month decrease in home sales, on a year-over-year basis, sales in the Greater Toronto area were up by 3.28% last month. Additionally, new listings saw a significant increase of 18.47% compared to the previous year. This growth in listings can be attributed to homeowners looking to sell their properties as they face higher mortgage payments upon renewal.
Toronto’s real estate market plays a significant role in the Canadian housing landscape, accounting for two-thirds of the country’s condominium sales. It often sets the tone for other major metropolitan areas, making it an important indicator of national housing trends.
The recent decline in home sales in the Greater Toronto area has raised questions about the future trajectory of the market. With changing price trends, anticipated rate cuts, and shifting consumer behavior, the real estate landscape is likely to see further fluctuations in the coming months.