Greater Toronto new home sales cooled abruptly, as pent-up demand collapsed. BILD GTA and Altus Group data shows a sharp decline in new home sales for February. The drop hit the City the most, especially in the condo apartment segment. While the drop was sharp, total sales for the month were more in line with historic levels.
Toronto New Home Prices Rise Up To 25%
Homebuyers are paying big premiums for new homes, even if demand has tapered off. The benchmark price for a new single-family home reached $1,373,473 in February, up 25.1% over the past 12 months. For condo apartments, prices climbed to a slightly more modest $1,042,064, up 8.4% over the same period.
The price for both segments is at new record highs, but condos have a small footnote. For single-family homes, people are paying a record amount per sqft. For condo apartments, the price is actually lower than the peak achieved a few months ago. This means falling prices have been compensated with larger units.
Greater Toronto New Home Sales Fall 34%
Greater Toronto new home sales made a sharp drop, returning to a more typical level. There were 3,240 new homes sold in February, down 34.1% from the same month a year before. Breaking it down, single-family homes represent 1,617 of the units sold, down 28.7% from last year. Condo apartments represent the other 1,623 sales, down 37.9% over the same period.
Greater Toronto New Home SalesTotal February new home sales in Greater Toronto. Source: Altus Group, Better Dwelling.
Home sales made a sharp decline largely due to falling demand for new condo apartments. Total sales of both single-family and condos combined are in line with the 10-year average. Condo apartments by themselves are lower, as buyer demand shifted to suburban single-family units.
City of Toronto New Home Sales Fall 39%
The decline in condo apartment demand impacted the City of Toronto mostly. The City of Toronto represented 865 of the new homes sold in February, down 39.2% from the same month last year. Single-family homes represent 77 of the city sales, up 327.8% over the same period. Condo apartment sales represent the other 788 sales, down 43.9% from last year.
Greater Toronto New Home SalesTotal new home sales in Greater Toronto for February, by region. Source: Altus Group, Better Dwelling.
In general, new home sales are down a lot in the City of Toronto. The city is overrepresented in the decline, compared to other regions. There is a big surge in single-family sales, but it always represents a small portion of total sales for the city. The reduction in sales volume now puts York Region in the top spot for new home sales.
Inventory Is More Balanced Than Last Year
Greater Toronto new home inventory is also down, but not as much as sales have dropped. Total inventory for all new home segments in the GTA fell to 12,774 in February, down 1.0% from the same month last year. The decline puts the ratio of sales to active listings ratio (SALR) at 17.0% for the month, compared to 27.1% last year.
Greater Toronto New Home Sales To ActiveThe ratio of sales to active listings for new homes in Greater Toronto, for the month of February. Source: Altus Group, Better Dwelling.
The sales to active listings ratio is often used as a proxy on price and demand. When it’s above 20%, the market is considered undersupplied. In this situation, prices are expected to rise. When it’s below 12%, the market is considered oversupplied, and prices are expected to fall. Between 12% and 20% means the market is priced correctly for current demand.
Greater Toronto new home sales fell sharply, especially in the City of Toronto. Much of the decline is confined to the condo apartment segment, where a well supplied resale market competes. Despite the better balance of inventory, people are still bidding up prices at a rapid rate.
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