If residents of the Greater Toronto Area (GTA) are dropping money on real estate in the region, it’s not on new homes. According to the Building Industry and Land Development Association (BILD), the GTA, March represented yet another month of record-breaking low sales for new homes.
This continues the trend we’ve seen in the “very slow” start to the year; the first three months of the year have set record lows for new home sales across the region, says BILD. There were 1,125 new home sales in March, which was down 16% from March 2023 and 66% below the 10-year average, according to Altus Group, BILD’s official source for new home market intelligence.
Naturally, this has implications on the region’s building industry, who've battled everything from supply chain issues to a labour shortage, and sky-high interest rates as of late. In short, it's too expensive for builders to build.
“GTA new homes sales for March came in at a record low as buyers remained on the sidelines,” said Edward Jegg, Research Manager with Altus Group. “Builders have responded with fewer new launches until sales begin to recover.”
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Condominium apartments, including units in low, medium and high-rise buildings, stacked townhouses and loft units, accounted for 601 units sold in March, down 38% from March 2023 and 73% below the 10-year average. When it comes to single-family homes – detached, linked and semi-detached houses and townhouses – sales were actually up 38% compared to March 2023 (a year into interest rate hikes) – but 51% below the 10-year average. In total, 524 single-family homes were sold in March.
In March, total new home remaining inventory decreased compared to the previous month, to 19,508 units. It included 16,318 condominium apartment units and 3,190 single-family dwellings. This represents a combined inventory level of 13.5 months, based on average sales for the last 12 months. To put thing into perspective, this is one of the highest inventory levels for new homes seen in the last decade.
According to BILD, when combined with the decrease of 16% to 18% in the benchmark price since the peak in 2022, this provides a unique buying opportunity for prospective new home buyers looking to buy a pre-construction home. It’s a combination of high inventory levels, the ability for buyers to lock in a price now, and benefitting from the lower interest rates that economists believe could be on the horizon.
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While this could be good news for some buyers, it’s a clearly different situation for those in the business of developing and building new homes.
“While the current situation is very beneficial for prospective new home buyers, it is a period of increased jeopardy for builders and developers that is becoming more critical with every passing day,” said Justin Sherwood, SVP Communications & Stakeholder Relations at BILD. “At the very time when builders should be ramping up production, they cannot due to a combination of high interest rates, elevated construction costs, and slow demand. This is becoming a very concerning situation and persistence of these market conditions risks future housing supply.”’
In the meantime, benchmark prices increased in March for single-family homes and for condominium apartments compared to the previous month. The benchmark price for new condominium apartments was 1,054,906, which was down 6% over the last 12 months and 16% from the 2022 peak. The benchmark price for new single-family homes was $1,594,951, which was down 11% the last 12 months and 18% since the 2022 peak.
