The Bank of Canada just held the line on interest rates and the local real estate market continues to experience a mixed bag of indicators punctuated by an overall decline in home sales and slight decrease in average home prices.
Last month, the Greater Toronto Area (GTA) showed a decline in home sales by 5.2% compared to the same month in 2022, primarily attributed by the Toronto Regional Real Estate Board (TRREB) to higher borrowing costs, ongoing economic uncertainty, and decisions made by the Bank of Canada. The limited supply of available listings further contributed to this decrease. During this period, the average selling price of homes remained largely unchanged.
On a monthly basis, when seasonally adjusted, both sales and average prices exhibited a slight decrease.
TRREB president Paul Baron said the persistent demand for housing, driven in part by record levels of immigration, particularly in the GTA and the broader Greater Golden Horseshoe. He also said that short-term market volatility is expected as buyers and sellers await more clarity regarding borrowing costs and the overall economic outlook.
In August, TRREB reported 5,294 home sales, reflecting a 5.2% decrease compared to August 2022. New listings saw a notable increase of 16.2% year-over-year, offering some relief on the supply front, but year-to-date listings remained substantially lower than the previous year. When seasonally adjusted, sales decreased by 1% compared to July 2023, while new listings showed a slight increase of 1.3% compared to the previous month.
“More balanced market conditions this summer compared to the tighter spring market resulted in selling prices hovering at last year’s levels and dipping slightly compared to July,” said Jason Mercer, TRREB chief market analyst. “As interest rates continued to increase in May, after a pause in the winter and early spring, many buyers have had to adjust their offers in order to qualify for higher monthly payments. Not all sellers have chosen to take lower than expected selling prices, resulting in fewer sales.”
The MLS® Home Price Index Composite benchmark for August 2023 demonstrated a year-over-year increase of 2.5%, and the average selling price rose by less than one percent to $1,082,496 over the same period. On a seasonally adjusted month-over-month basis, the MLS® HPI Composite benchmark remained relatively stable, while the average price decreased by 1.6%.
In the city of Toronto in particular, the strongest sector of the market in terms of price were the semi-detached and townhome segments, which were up by 9.4% and 6.2% respectively.