TORONTO — The Toronto Regional Real Estate Board says July's home sales, listings and prices edged up from the same time last year, but activity looks to be slowing in the face of higher interest rates.
The Ontario board revealed Thursday that sales across the market reached 5,250 last month, up 7.8 per cent compared with July 2022.
Paul Baron, the board's president, saw the increase as a sign that households have adjusted to higher borrowing costs after the Bank of Canada restarted its cycle of interest rate hikes because inflation has proven too stubborn.
"With that being said, it does appear that the sales momentum that we experienced earlier in the spring has stalled somewhat since the Bank of Canada restarted its rate tightening cycle in June," he said in a press release.
His observation was borne out in month-over-month sales figures that July marked the second month in a row for lower sales. July sales were down almost 30 per cent from 7,464 in June and nearly 42 per cent from 8,987 in May.
They paint a picture of picture of a market that was picking back up despite a rapid succession of interest rate hikes last year but has since been spooked by further raises and high inflation.
The conditions have left many buyers on the sidelines awaiting further price declines or more favourable interest and mortgage rates, while sellers hold off listing properties because the bidding wars seen early in the COVID-19 pandemic have dissipated and buyer sentiment has dramatically shifted.
Toronto real estate agent Cailey Heaps said the market is accustomed to a seasonal slowdown in the summer months, but she noticed it started a little earlier this year and thought that was likely a result of recent interest rate announcements.
"The July announcement pushed some buyers back into the market more actively to take advantage of their existing mortgage approvals and rates, but it was still slower than June," she said in an email.
"While we’re only halfway through, 2023 is shaping up to be a complicated year driven by uncertainty around the direction of interest rates, inconsistent demand from buyers in the central core of Toronto, and an economy that is trying to find balance."
Those that are on the market for a new home have been finding fewer properties to chose from, though the board said their selection was more plentiful this July than last.
New listings sat at 13,712, almost 12 per cent higher than they were in July 2022.
The lack of inventory is driving prices up, Heaps and the board found.
The average selling price was up 4.2 per cent in July from a year earlier to $1,118,374, while the benchmark price was up 1.3 per cent.
The average cost of a detached home in the market rose 4.8 per cent year over year to top $1.4 million, while semi-detached properties rose 2.8 per cent to $1.1 million.
Over the same period, townhouses ticked up almost six per cent to $956,000 and the condo and apartment segment of the market edged up about two per cent to $735,000.
Overall prices, however, trended lower from June on a seasonally adjusted basis with the average price down 0.7 per cent.
The July price pullback marked the first time since February that such costs saw a retreat.
Toronto's July figures came a day after the Real Estate Board of Greater Vancouver revealed the area's composite benchmark sat at just over $1.2 million in July, up 0.6 per cent from the previous month and 0.5 per cent compared with the same month last year.
Sales in the market totalled 2,455 last month, a 28.9 per cent increase from a year ago. Sales were 15.6 per cent below the 10-year seasonal average of 2,909.
This report by The Canadian Press was first published Aug. 3, 2023.
Tara Deschamps, The Canadian Press
