Home sales in the Greater Toronto area decrease by 16% as buyers delay purchases despite interest rate reduction

The Toronto Regional Real Estate Board reports a 16.4 percent decrease in home sales in June compared to last year, as many potential buyers choose to remain on the sidelines despite the Bank of Canada interest rate cut.

In June, 6,213 homes were sold, down from 7,429 in the same month last year. The average selling price in the Greater Toronto Area also saw a 1.6 percent decrease year-over-year to $1,162,167.

TRREB president Jennifer Pearce stated that while the central bank’s rate cut initially provided some relief to the housing market, the June sales data suggests that more rate cuts may be needed to incentivize buyers.

The Bank of Canada initiated its rate-lowering process with a 25-basis-point cut on June 5, bringing its key interest rate down to 4.75 percent from five percent. Ipsos polling for TRREB indicates that a cumulative rate cut of at least 100 basis points would be necessary to significantly boost home sales.

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“It’s got to be a lot more than 25 basis points,” said Vy Ngo, a sales representative with Big City Realty Inc. Brokerage.

Despite the limited increase in buyer demand post-rate cut, there was a surge in supply across the GTA, according to Ms. Ngo. Sellers seemed more optimistic than buyers about the market rebounding following a slow spring.

“As soon as that happened, there was this huge amount of new listings that came to the market,” she added.

Last month, there were 23,613 active listings, marking a 67.4 percent rise from June 2023. New listings also increased by 12.3 percent, with 17,964 properties listed.

“The GTA housing market is currently well-supplied, offering buyers substantial choice and negotiating power on price,” said TRREB chief market analyst Jason Mercer.

City of Toronto sales dropped by 20.6 percent to 2,236 in June, while sales in the rest of the GTA decreased by 13.8 percent to 3,977. All property types saw declines in sales, with condos experiencing a 28.1 percent decrease.

Vy Ngo mentioned that current conditions favor buyers, as the increased supply and decreased competition provide negotiating leverage.

“It’s really hard to time the market,” she said. “I have some that are holding to see where things go, but I do notice more people thinking about this than a couple of months ago.”