May home sales continued at low levels, especially in comparison to last spring’s market activity. Home buyers are still waiting for relief on the mortgage rate front which they got this week when the Bank of Canada dropped interest rates 25 basis points to 4.75%. Existing homeowners are anticipating an uptick in demand, as evidenced by a year-over-year increase in new listings. With more choice compared to a year ago, buyers benefitted from more negotiating room on prices.  

Greater Toronto Area REALTORS® reported 7,013 home sales through TRREB’s MLS® System in May 2024 – a 21.7% decline compared to 8,960 sales reported in May 2023. New listings entered into the MLS® System amounted to 18,612 – up by 21% year-over-year. 

The average selling price of $1,165,691 was down by 2.5% over the May 2023 result of $1,195,409. On a seasonally adjusted monthly basis, the average selling price edged up slightly compared to April 2024.

Despite a glut of active listings on the market, particularly for condominiums, prices seem to remain stable. The average price for the GTA was $730,815, down 2.4% over May of 2023, but up slightly month-over-month. 

At the end of May, Greater Toronto had the highest number of condo units for sale for any month in recent history with 8,183 apartment units on the market. The last highest number of active condo listings was 7,600 in October 2020. 

“While interest rates remained high in May, home buyers did continue to benefit from slightly lower selling prices compared to last year. We have seen selling prices adjust to mitigate the impact of higher mortgage rates. Affordability is expected to improve further as borrowing costs trend lower. However, as demand picks up, we will likely see renewed upward pressure on home prices as competition between buyers increases,” said TRREB Chief Market Analyst Jason Mercer.

Olivia Cross, North America economist at Capital Economics, notes that recent data shows continued strength in household consumption in the first quarter, which was a surprise given weaker retail sales numbers, in her opinion. Statistics Canada reported last week that real gross domestic product rose at an annualized rate of 1.7 per cent in the first quarter.  

“The strength of consumption suggests that interest rates are not taking quite as heavy a toll on households as we previously thought, and the economy appears to have carried more momentum into the second quarter than either we or the Bank expected,” Ms. Cross says in a note to clients.