GTA home sales drop 7.1% in September as higher rates bite

Greater Toronto home sales slid 7.1 per cent last month compared with September 2022, with sales of semi-detached houses and townhouses particularly declining from last year.

Last month’s 4,642 home sales also marked a 12.1 per cent month-over-month decline from August, according the Toronto Regional Real Estate Board’s latest market watch report.

Meanwhile, the average home price reached $1,119,428, a rise of 3.4 per cent from August and a three per cent increase from last September.

New listings surged 44.1 per cent to 16,258 in September compared with extremely low levels in September 2022, when there were just under 5,000. The number of listings also trended upward on a month-over-month basis.

The board attributed the downward trend in sales to the impact of high borrowing costs, high inflation, uncertainty surrounding future Bank of Canada rate decisions and slower economic growth.

“GTA home selling prices remain above the trough experienced early in the first quarter of 2023,” said TRREB chief market analyst Jason Mercer in a press release.

“However, we did experience more balanced market in the summer and early fall, with listings increasing noticeably relative to sales. This suggests that some buyers may benefit from more negotiating power, at least in the short term. This could help offset the impact of high borrowing costs.”

TRREB president Paul Baron said elevated borrowing costs are expected until mid-2024, after which they will start to trend lower, suggesting there will be an uptick in demand for home ownership in the second half of next year.

Also of concern last month was the macroeconomy, said Cailey Heaps, president of the Heaps Estrin Real Estate Team in Toronto.

“Are we heading into a soft recession? I think that causes people to pause on their decision making,” she said.

“I do think that we’ll see improved activity once interest rates change. That might be a little bit longer than the second half of 2024.”

Heaps said her experience over the past year has diverged from the board’s overall findings when it comes to sales, with volume ticking up so far this year.

“I don’t know if that’s reflective of geography, the market I work being central Toronto, versus perhaps the periphery of the city, which I know has felt a little bit more pain than central Toronto has to date,” she said.

“Pricing is up, which I would say is consistent with what we’re seeing as well throughout the central core.

In the City of Toronto, there were 1,744 sales last month, roughly flat compared with the same time in 2022. Throughout the rest of the GTA, home sales declined 11.3 per cent to 2,898.

Sales of semi-detached homes saw a 19.4 per cent decrease in September, while the number of townhouses that changed hands was down 10.2 per cent. Both saw comparatively weaker sales for the month in the 905 region compared with the City of Toronto.