New home sales in the GTA hit an "all time low" in July, posting a scrappy 654 transactions in the month, according to data released by Building Industry and Land Development (BILD) on Wednesday.
These 654 new home sales constitute a 48% year-over-year drop, and a 51% plummet compared to the 1,339 new homes sales recorded in June. The number of transactions from July also sits 70% below the 10-year average. In May, STOREYS reported on the second lowest month for new home sales on record since BILD started keeping track in 1990 — at 936 sales, second only to May 2020. Now, July 2024 takes the metaphorical cake nobody wants.
The reason? Building new homes is too expensive, period. And interest rate cuts aren't helping — at least not yet, says Justin Sherwood, SVP Communications & Stakeholder Relations at BILD. “The numbers present a clear picture and signal the need for an urgent response from government,” he said in the BILD media release. “Changes in interest rates will not solve what is an ongoing structural problem, particularly evident in the GTA. The cost to build, driven by excessive government fees and taxes, is simply too high. Without immediate action by government, new construction activity will continue to slow and the GTA’s housing shortage will reach unprecedented levels over the next few years.”
Of the new homes that did sell in July, 367 were single-family homes. Year-over-year, this represents only a 1% decline in the category, though it is still 42% below the 10-year average. Condos made up the rest of the new home sales, with 287 transactions, constituting a substantial 67% decrease from July 2023 and landing us 81% below the 10-year average.
As for GTA new home remaining inventory, we've been in what BILD calls an "unhealthy situation" for months now, hovering near or just above the 20,000-unit mark. This includes 17,445 condominium apartment units and 4,215 single-family dwellings. In July, inventory jumped up to 21,660 units, pushing the combined inventory level up from 14.5 months to 15 months. "This is a high inventory level," BILD makes clear.
"Months of inventory are increasing not because the number of new units coming to market is dramatically increasing, but rather because sales are continually decreasing," says the report. "As interest rates decrease, sales will return but it will take longer for new building to recover, setting up a future supply/demand imbalance."
Slow sales and increased months of inventory also drove prices down in July, with the benchmark price for new single-family homes in the GTA hitting $1,585,881 — down 5% over the last 12 months and dipping from $1,613,613 in June. Prices also dropped for condominiums, with July recording a benchmark price of $1,020,179 — down 6% over the last 12 months and nominally down from $1,023,389 in June.
Though it is clear the Bank of Canada's rate cuts haven't taken hold in the new housing market just yet, Edward Jegg, Research Manager with Altus Group, offers a positive forecast. “GTA new homes sales in July 2024 sank to another record monthly low as buyers remained unwilling to leave the sidelines,” said Jegg. Adding that, “Further expected decreases in interest rates in the coming months, along with elevated inventories, means there will be plenty of opportunities once consumer confidence improves.”
