New home sales in the Greater Toronto Area (GTA) spiked in June compared to the same time last year, and yet, were still significantly below the 10-year average for the region.
New data from the Building Industry and Land Development Association (BILD) and Altus Group revealed a total of 2,526 new home sales in June, up 32% from June 2022 but 30% below the 10-year average.
The most affordable market segment -- condominium apartments -- dominated sales, accounting for 1,957 of June's transactions, up 11% from June 2022 and down a smaller 21% from the 10-year average.
Even still, single-family home sales saw a much more staggering 256% increase from June 2022 with a total of 569 sales last month. This, however, was still down 49% from the 10-year average.
Altus Group Research Manager Edward Jegg said that new home sales "took a step back in June," with buyer hesitancy having returned amid rising interest rates. A simultaneous increase in inventory, however, "eased pressure on prices."
Indeed, June's new home remaining inventory increased compared to previous months, reaching 16,379 units, something BILD says had a "softening impact on prices."
The benchmark price for a new condo apartment fell 8.4% year over year to $1,090,494, meanwhile the benchmark price for new single-family homes dropped 6.9% year over year to $1,716,467.
BILD President and CEO David Wilkes says there's "no doubt" that recent interest rate increases are pushing prospective homebuyers to the sidelines -- something that's helping to ease demand and bring down price pressure.
“Rising interest rates also delay the addition of much-needed supply to the market, because pre-construction sales are a crucial element in financing new housing," Wilkes said. "Thus, when the Bank of Canada continually raises interest rates, it is exacerbating Canada’s housing supply and affordability crisis.”
The Bank of Canada raised its policy interest rate by another 25 basis points earlier this month, bringing it up to 5% -- the 10th rate hike since March 2022. Although inflation fell to 2.8% in June -- much closer to the bank's 2% target than the peak of 8.1% that was reached last summer -- the Bank of Canada has said it's ready to raise rates again in order to keep reining in inflation. Some experts, however, are predicting a pause at 5% during the next rate announcement, scheduled for September 6.