Toronto area new home sales continue to drop and hit an all-time low in July.

Sales of newly built homes continue to decline, with July hitting an unprecedented low for the month. The number of new project releases has been minimal, and months of inventory continue to rise.

In July, there were 654 new home sales, a 48% drop from the previous year and a 51% drop compared to the 1,339 new homes sales recorded in June. The number of transactions from July also sits 70% below the 10-year average according to a recent report from the Building Industry and Land Development Association (BILD).

“New home sales in the GTA in July 2024 reached another record low as potential buyers stayed on the sidelines,” said Edward Jegg, research manager at Altus Group, the official source of new home market data for BILD.

The reason? Building new homes is too expensive, period. And interest rate cuts aren't helping, at least not yet. The cost of building, driven by excessive government fees and taxes, is simply too high. New construction activity will continue to slow and the GTA’s housing shortage will reach unprecedented levels over the next few years.

Slow sales and increased months of inventory also drove prices down in July, with the benchmark price for new single-family homes in the GTA hitting $1,585,881, down 5% over the last 12 months and dipping from $1,613,613 in June. There’s now 15 months of inventory — the time it would take to sell inventory based on current demand — on the market.

Further expected decreases in interest rates in the coming months, along with elevated inventories, means there will be plenty of opportunities once consumer confidence improves.

The Bank of Canada has begun lowering its key interest rate with two consecutive rate cuts this summer, and economists forecasting another two rate drops by the end of the year. While that will help boost some movement in the market, all levels of government could be more proactive, the report says.

Changes in interest rates will not solve what is an ongoing structural problem, particularly evident in the GTA. The cost to build, driven by excessive government fees and taxes, is simply too high. Without immediate action by government, new construction activity will continue to slow and the GTA’s housing shortage will reach unprecedented levels over the next few years.