August was, by many measures, a stellar month for Toronto’s housing market, with record-breaking sales signalling the continuation of a massive bounce back for the market after a dismal spring.
But signs have begun to emerge that the robust summer rebound may be losing a bit of momentum heading into an uncertain fall season.
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In a deep dive into the Toronto Regional Real Estate Board’s (TRREB) August sales and price data, Central 1 Credit Union found that last month new listings grew at a faster rate than home sales for the first time since the pandemic lockdown began.
This spike in new listings caused the widely watched sales-to-new-listings ratio to decline to 53.6 percent in August, down from 62.9 percent in July. The downward shift placed the Toronto market squarely in balanced territory, as a ratio reading below 40 percent signals a buyer’s market while a reading above 60 percent denotes a seller’s market. Typically, prices increase at a significant rate when the ratio is above 60 percent over a sustained period.
“With more choice in the market [in August], average price growth increased at a slower clip moving up 3.5 per cent to $994,316,” wrote Central 1 Regional Economist Edgard Navarrete.
TRREB’s home price index also increased at a slower rate than what was seen in July, rising two percent in August, compared to 2.7 percent a month earlier, according to Navarrete’s analysis. The economist said price growth deceleration was evident across all property types, with single-family homes logging the most significant slowdown.
While Toronto’s housing performance this summer defied expectations, delivering several months of strong home sales activity and price growth, the potential for a fall cooldown has been weighing on the minds of market experts.
Navarrete acknowledges that low mortgage rates are here to stay for some time, but pent-up housing demand held over from the spring may be starting to ebb while the employment picture remains precarious for many would-be homebuyers.
“Increased choice in the market, especially for condo apartments, has rebalanced the overall market at least for one month. Whether this is a blip or the start of a trend as the summer rush ends and the rest of the year brings muted activity remains to be seen,” Navarrete wrote.