New home sales ended a slow year on a sluggish note as high interest rates continued to keep Greater Toronto Area (GTA) buyers and builders at bay in December.
According to a new report from the Building Industry and Land Development Association (BILD), 554 new homes were sold in the GTA in December, a 67% decline from November.
On an annual basis, sales edged up a "marginal" 0.5% from December 2022, which marked the second-lowest level for the month since the recession-plagued December 2008.
Despite the slight recovery from last year’s lows, the figure, which is courtesy of data from Altus Group, remains 67% below the 10-year average.
"Both new home buyers and builders remained on the sidelines in December, lacking the confidence to re-engage," said Edward Jegg, Research Manager with Altus Group.
"As a result, new home sales were sparse and the likelihood for an appreciable uptick in the first half of 2024 remains dim."
Condominium apartments, including units in low-, medium-, and high-rise buildings, stacked townhouses, and loft units, accounted for the majority of homes sold in December, with 400 units changing hands.
However, the figure marks a 2% annual dip and is 66% below the 10-year average. On a monthly basis, new condo sales declined 69%.
Although just 154 single-family homes, including detached, linked, and semi-detached houses, as well as townhouses, were sold in the GTA in December, activity has increased 6% year over year. Still, though, sales sit 70% below the 10-year average and have fallen 59% from November.
"With current interest rates we are experiencing a hurry up and wait sales environment as potential buyers sit on the sidelines," said Justin Sherwood, SVP Communications and Stakeholder Relations at BILD.
"Given that housing starts lag pre-construction sales by as much as two years, we can expect that the low level of sales in 2023 will result in lower housing starts in the future. In fact, we are already seeing the pace of housing starts in the GTA beginning to decline. This will result in less housing supply being added to the market in the near future, aggravating the housing crisis at the same time as we are experiencing increasing demand for new homes."
With starts slowing, total new home remaining inventory dipped for a second-straight month, to 20,252 units. Comprised of 16,850 condos and 3,402 single-family homes, remaining inventory includes units in pre-construction projects, projects currently under construction, and completed buildings.
Based on average sales over the last year, combined inventory levels rose to nine and a half months, the highest level since 2015. However, the jump doesn’t indicate a boost to supply, as builders added "very little" to the market in terms of new projects in December.
In the midst of a quiet market, the benchmark price for new condos fell 7.5% annually, to $1,047,288, while prices for new single-family homes fell 8.5% year-over-year, to $1,604,977.
