New home sales in the Greater Toronto Area remained sluggish last month, but a new report suggests that the market is now primed for buyers following four consecutive interest rate cuts.
The Building Industry and Land Development Association (BILD) released its findings on Monday, reporting 591 new home sales in September, which marks a 69 per cent decrease year-over-year.
Of those sales, 344 were for single-family homes, including detached, linked, semi-detached houses and townhouses, down 41 per cent from last September.
There were 247 condominium units sold during the same period, down 81 per cent from 2023.
“GTA new home sales had another slow month in September 2024, despite three successive Bank of Canada rate cuts” Edward Jegg, research manager with Altus Group (BILD’s new home market insights provider), wrote in a news release.
The central bank finally started cutting its policy interest rate in June, after holding it at five per cent since July 2023. The rate now stands at 3.75 per cent.
“We now have a market that is highly primed with elevated inventories, falling prices and a further 50 basis point rate cut. All that is needed is for buyers to jump off the sidelines,” Jegg said.
According to the report, the total new home remaining inventory has increased slightly compared to the previous month to nearly 22,000 units, including nearly 17,500 condo units and close to 4,500 single-family dwellings.
“This represents a combined inventory level of 13.8 months, based on average sales for the last 12 months. This remains a high months of inventory level (based on sales), however the actual number of units maintains the trend seen since autumn 2023 of actual inventory levels near or just above the 20,000-unit mark,” the report noted, adding that those figures indicate a “stagnated market” of slow sales and few housing starts.
“The longer sales remain low, the longer the future negative impact on housing starts in the GTA, which will set the region up for inventory shortages and price appreciation in the future. The groundwork for a future supply crunch is being laid out today.”
The report noted that amid the glut of new homes, benchmark prices for all new homes decreased slightly last month. For condos, the benchmark was $1.025 million, down one per cent year-over-year. For single-family homes, the price decreased to $1.565, down 0.1 per cent over the same time period.