Home sales in the GTA fell for the fourth consecutive month in June as higher borrowing costs weighed on the market.
The Toronto Regional Real Estate Board (TRREB)’s latest Market Watch report reveals that just 6,474 homes changed hands in the region last month, a 41% decrease from June 2021 and nearly an 11% drop from May. Only 2,422 homes were sold in Toronto last month.
While the drop from May to June can be attributed to the “seasonal nature of the market,” the board said it expects current cooler conditions to persist over the summer.
“Home sales have been impacted by both the affordability challenge presented by mortgage rate hikes and the psychological effect wherein home buyers who can afford higher borrowing costs have put their decision on hold to see where home prices end up,” said TRREB President Kevin Crigger.
“Expect current market conditions to remain in place during the slower summer months.”
On June 1, the Bank of Canada hiked interest rates to 1.5%, the third increase since March. Another rate announcement is scheduled for July 13 as the bank tackles record-high inflation, which hit 7.7% last month.
Although higher rates mean less purchasing power for buyers, the sales-to-new listings ratio edged lower in June. The ratio—which is key to determining who wields more power in the real estate market—dropped to 62.1%, down from May’s 65.1%.
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Although fewer homes were sold in June, the average selling price in the GTA was higher than a year ago. The number of new listings, though, remained relatively unchanged.
The average price in the region reached $1,146,254 last month, a year-over-year increase of 5.3%, but nearly a 6% drop from May prices. The same trend played out in the City of Toronto, where average prices hit $1,152,175 last month, up from $1,078,684 in June 2021.
Toronto Regional Real Estate Board
There were 16,347 new listings in the GTA in June 2022, a 0.95% increase from a year prior. This stability made for a more moderate pace of annual price growth, according to the TRREB.
“Listings will be an important indicator to watch over the next few months,” said TRREB Chief Market Analyst Jason Mercer.
“If would-be sellers decide to take a wait-and-see attitude over the next few months, it’s possible that active listings could trend lower as well. This could cause market conditions to tighten somewhat, providing some support for home prices,” said Mercer.