Toronto home sales see first monthly increase since March

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Though still below 2021 levels, home sales in the Greater Toronto Area have risen for the first time since March.

In its August Market Watch report, the Toronto Regional Real Estate Board (TRREB) revealed that 5,627 homes were sold across the region last month, compared to 8,549 sales in August 2021 and 4,912 in July.

While the figure represents a year-over-year drop of 34.2%, the board noted it is a smaller annual rate of decline than the previous four months. It is also a 14.5% increase over July.

In July, the Bank of Canada increased its key interest rate by 1%, the largest spike since 1998, and a further increase is expected on September 7.

The resulting jump in borrowing costs has “impacted home purchase decisions,” said TRREB President Kevin Crigger. Many would-be buyers have remained in the wings as they await increased affordability.

Home prices have fallen from the February peak, and properties are increasingly selling under asking, but the report shows they’re still higher than they were in August 2021.

Year-over-year, the MLS Home Price Index (HPI) was up by 8.9%, although it was lower compared to July. The average selling price for all home types combined increased by 0.9% annually, and 0.4% on a monthly basis, to $1,079,500.

The TRREB noted that monthly growth in average prices accompanied by a dip in the HPI Composite suggests that “a greater share of more expensive home types sold in August.”

Detached home prices in the GTA jumped 1.2% month-over-month to $1,379,700, but semi-detached homes, townhouses, and condos all saw average prices fall between July and August. They were down 7.3% ($998,490), 0.39% ($900,307), and 1.1% ($711,321), respectively.

There were 10,537 new listings across the region in August, a 0.73% decline from a year ago. Sales represented a higher share of new listings compared to the previous three months, the TRREB said. If the trend continues, there could soon be “some support for selling prices.”

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While rising mortgage rates have weighed on prospective buyers, they’re leading to higher costs for existing homeowners who are nearing renewals, too, Crigger said.

TRREB CEO John DiMichele urged the Office of the Superintendent of Financial Institutions to weigh in on whether the current stress test remains applicable.

“There is room for the federal government to provide for greater housing affordability for existing homeowners by removing the stress test when existing mortgages are switched to a new lender, allowing for greater competition in the mortgage market,” he said.

“Further, allowing for longer amortization periods on mortgage renewals would assist current homeowners in an inflationary environment where everyday costs have risen dramatically.”