TRREB reports that the housing market has been adjusting to higher borrowing costs as the number of sales fell on a yearly and monthly basis in April. Photo: Spiroview Inc./ Adobe Stock

So far this year, the Bank of Canada has hiked its target for the overnight policy rate to one per cent, a decision that could be behind the slowdown in Toronto home sales during April.

The latest data from the Toronto Regional Real Estate Board (TRREB) reports that the housing market has been adjusting to higher borrowing costs as the number of sales fell on a yearly and monthly basis in April. The real estate board noted that this trend has been the case during past rate tightening cycles, where homebuyers have “moved to the sidelines,” to reposition themselves in the market.

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“Based on the trends observed in the April housing market, it certainly appears that the Bank of Canada is achieving its goal of slowing consumer spending as it fights high inflation. Negotiated mortgage rates rose sharply over the past four weeks, prompting some buyers to delay their purchase,” said TRREB’s president, Kevin Crigger, in the monthly market report.

“Moving forward, it will be interesting to see the balance the Bank of Canada strikes between combatting inflation versus stunting economic growth and related government revenues as we continue to recover from and pay for pandemic-related programs,” he added.

Here’s what we know about Toronto’s April housing market from TRREB.

Toronto home sales drop yearly and monthly

Last month, 8,008 homes were bought and sold over the GTA’s MLS systems, down 27 per cent from March and a 41.2 per cent decrease compared to April 2021 when 13,613 homes were sold.

The majority of April’s home sales took place in the 905 region, where 4,984 properties traded hands. By property type, detached homes accounted for the majority of transactions, with 2,732 homes sold in the 905 area (​​47.2 per cent less than last year) and 3,600 homes sold throughout the entire GTA (down 44.5 per cent from April 2021).

When it comes to supply, 18,413 new listings came online during April, about 2,400 less properties compared to the same period last year when 20,841 homes were added to the market.

John DiMichele, CEO of TRREB, stated in April’s market report that policymakers should not assume that because home sales have toppled from their record peak, that we can forget about the market’s lack of inventory.

“Buyers who have moved to the sidelines will not remain there forever, and the population of our region will continue to grow on the back of immigration. In the absence of new supply, we will build a significant amount of pent-up demand that will need to be satisfied in the not-too distant future,” said DiMichele. “The ability to increase and diversify our housing supply needs to be a key area of debate in our upcoming provincial and municipal elections,”

Benchmark home price rises from 2021 levels to $1.25 million

Although sales fell in April, the price of a Toronto home was up compared to April 2021.

The average selling price of a GTA home increased 15 per cent year-over-year to $1,254,436 last month, up from $1,090,414 in April 2021. However, the average price dropped compared to March, when homes cost around $1,300,082.

Townhomes in the 905 region reported the most price growth, rising 20 per cent from April 2021 to an average of $997,416. Detached homes in the 416 area continue to cost the most compared to other GTA property types, with an average price of $1,947,975, up 14.9 per cent annually.

The MLS Home Price Index Composite Benchmark grew 30.6 per cent yearly in April, with the benchmark level down in comparison to March.

“Despite slower sales, market conditions remained tight enough to support higher selling prices compared to last year,” said Jason Mercer, chief market analyst at TRREB. “However, in line with TRREB’s forecast, there is evidence of buyers responding to increased choice in the marketplace, with the average and benchmark prices dipping month-over-month.”

Mercer added that there may be enough competition among purchasers to support continued price growth relative to 2021. However, the annual pace of price growth will likely moderate in the following months.

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