Toronto-area home sales drop 5.8 per cent in October amid high interest rates

Greater Toronto home sales fell 5.8 per cent last month compared with October 2022, with sales of townhouses recording the biggest decline.

On a monthly basis, the Toronto Regional Real Estate Board said October’s 4,646 home sales were relatively flat over the 4,631 sales in September.

The board attributed the year-over-year slide to a lack of affordability and uncertainty associated with high borrowing costs, which has sidelined many would-be homebuyers.

“Record population growth and a relatively resilient GTA economy have kept the overall demand for housing strong,” said TRREB president Paul Baron in a press release on Thursday.

“However, more of that demand has been pointed at the rental market, as high borrowing costs and uncertainty on the direction of interest rates has seen many would-be homebuyers remain on the sidelines in the short term. When mortgage rates start trending lower, home sales will pick up quickly.”

New listings surged 38 per cent to 14,397 in October compared with 10,433 in October 2022, which had marked a 12-year low.

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Despite higher listings and softening sales, the average home price reached $1,125,928, a 3.5 per cent rise from last October.

The board’s chief market analyst Jason Mercer attributed the price increase to competition between buyers.

“Lower home prices have mitigated the impact of higher borrowing costs to a certain degree,” he said, acknowledging home prices remain well below their peak at the beginning of 2022.

Toronto realtor Vy Ngo said the market is currently as slow as she’s ever experienced in her career while buyers try to wait out the high interest rate environment.

“I thought this time last year, it was really bad. But this period we’re in right now is even more than a year ago,” said Ngo, a sales representative with Big City Realty Inc. Brokerage.

“Sales are really low because buyers just can’t afford to qualify for a mortgage.”

In the City of Toronto, there were 1,836 sales last month, a 2.3 per cent drop compared with the same time in 2022. Throughout the rest of the GTA, home sales declined 7.9 per cent to 2,810.

The number of townhouses that changed hands throughout the whole region saw an 11.5 per cent decrease in October, followed by drops of 5.7 per cent for detached homes, 3.2 per cent for semi-detached and 2.2 per cent for condo apartments.

Ngo said that although pricey mortgages are a deterrent, buyers who can afford to enter the market now might be better off doing so to avoid the stiff competition that will come once rates begin to fall.

“More people are comfortable when rates go down. You’re going to be shopping at a higher price,” she said.

“Those who can afford and want to buy now, it’s a good opportunity because it’s not going to be like this forever.”