New construction high-rise buildings in the final construction stages.

According to the Building Industry and Land Development Association (BILD), the GTA new home segment was “quiet in May.” Photo by Yuri Bizgaimer via Adobe Stock

The Greater Toronto Area new construction market continued to slow down in May as sales activity dropped below long-term averages that month.

According to the latest insights from the Building Industry and Land Development Association (BILD), the GTA new home segment was “quiet in May.” A total of 2,549 new units were sold that month, a 40 per cent drop from May 2021 and 26 per cent below the market’s 10-year average.

Breaking down May’s total number of new construction home sales, the vast majority of units sold were condo apartments, which includes suites in low-, medium- and high-rise buildings, stacked townhouses and loft units. In May, 2,058 new condo apartments were purchased, 31 per cent less compared to May 2021 and 10 per cent below the 10-year average. The majority of new condo apartments sold were located in Peel Region and Toronto, where 916 and 764 transactions took place.

The other 491 sales recorded in May were single-family homes, including detached, linked and semi-detached houses and townhouses, but excluding stacked townhomes. This marks a 62 per cent decline in new single-family home sales from last May and a 58 per cent drop from the 10-year sales average. Most of May’s single-family property transactions occurred in Durham and York regions, where 158 and 135 new homes were bought and sold.

So far in 2022, a total of 17,457 new homes have been sold across the GTA, down 15 per cent from the same time period in 2021. Year-to-date, 3,203 new single-family homes have been bought, 58 per cent less than last year. By comparison, 14,254 new GTA condo apartments have been purchased in 2022, up 10 per cent from 2021.

Edward Jegg, research manager at Altus Analytics at Altus Group, stated in the monthly BILD report that new construction home sales pulled back in May largely due to higher mortgage rates and growing economic concerns.

“Inventory levels are moving higher but benchmark prices are showing resiliency,” he added.

New home prices and inventories rise in May

Despite lower annual sales, the price of new GTA homes grew during May.

The benchmark price of a new condo apartment was $1,176,080 in May, a 10.5 per cent increase over the last 12 months. Similarly, the benchmark for a single-family home climbed to $1,814,774 in the same month, up 31.5 per cent over the last year.

In May, total new home remaining inventory increased compared to the previous month up to 10,004 new units. This comprised 8,050 condo apartments and 1,954 single-family homes. Remaining inventory is defined as units in pre-construction projects, developments currently under construction and completed buildings.

“While short term macro-economic trends point to an easing of housing demand in the coming months, failure to plan to ensure a consistent pipeline of new housing of all types will result in a future resurgence of the tight market conditions of the last few years,” said Dave Wilkes, BILD’s president and CEO, in the report.

“This was the pattern following the 2017 market correction and the introduction of the mortgage stress test. Given present projected population growth, it is prudent for governments and industry to use this time to collectively plan for another period of renewed demand,” he added.

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