"A 'Cost To Build' Crisis": GTA New Home Sales Down 70% Over Last September

The most recent data from the Building Industry and Land Development Association shows that new homes sales in the GTA remained low in September, representing "another slow month [...] despite three successive Bank of Canada rate cuts," said Edward Jegg, Research Manager with Altus Group.

There were a total of 591 new home sales recorded in September in the GTA, down 69% from last September and 76% below the 10-year average. But the relatively low numbers do represent an improvement upon August's historically low sales numbers at 464 new homes sold.

“We now have a market that is highly primed with elevated inventories, falling prices and a further 50 basis point rate cut," says Jegg. "All that is needed is for buyers to jump off the sidelines.”

Of September's sales action, single-family homes accounted for a little over half of the transactions at 344 sales, down 41% from September 2023 and 58% below the 10-year average. Accounting for the remaining 247 sales were condominium apartments, which clocked in at a substantial 81% below September 2023 levels and 85% below the 10-year average.

Building Industry and Land Development Association

As a result, new home inventory continued in its upwards trajectory, with 21,871 units now in inventory, up from 21,660 in August and 21,296 in July. Current inventory is made up of 17,427 condominium apartment units and 4,444 single-family dwellings, amounting to a combined inventory level of 13.8 months.

This inventory level is down from 14.5 months in August, but BILD explains that we are still hovering above 20,000 units, a level that "is a sign of a stagnated market – buyers not buying and builders not adding new projects," says the release. "The longer sales remain low, the longer the future negative impact on housing starts in the GTA, which will set the region up for inventory shortages and price appreciation in the future."

As for benchmark prices is the GTA, the average price of new single-family home now sits at $1,565,116, down a slight 0.1% over the last 12 months, and $1,025,111 for a condominium apartment, a 1% drop over the last year. This is also down from $1,598,852 and $1,031,356 in August, respectively.

BILD's SVP of Communications and Stakeholder Relations Justin Sherwood points to construction costs and government fees as the driving forces behind months of low sales despite rate cuts.

“There is a ‘cost to build’ crisis in the GTA. With land, labour, and material prices being what they are, it is very difficult to build a new home at a cost that the market will readily absorb – and this issue is manifesting itself in the form of low sales and therefore lower housing starts in the GTA,” says Sherwood. “Government fees and taxes comprise 25% of the cost of an average home in the GTA. This is why BILD has been calling on governments to do something about lowering added fees and costs to help address affordability and to ensure that there is adequate supply of new housing available as buyers begin to return to the market as interest rates continue to decline.”