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Toronto home sales fall in June despite rate cut

June 2024 TRREB recap

One rate cut hasn’t been enough to re-ignite Toronto’s housing market, according to the latest June real estate data.

The Toronto Regional Real Estate Board (TRREB), reports home sales are down -16.4% on an annual basis, with a total of 6,213 properties changing hands. That also marks a decrease of -11.4% from May. Sellers, meanwhile, continue to heap new supply onto the market, with a total of 17,964 new listings coming online over the course of the month, up 12.3% from 2023.

Greater Toronto Area home prices have remained sticky, however, edging down just -1.6% year over year to an average of $1,162,167. The MLS Home Price Index – which tracks the most typical type of home sold with the high and low extremes stripped out – dipped by 4.6%.

Home prices and sales were down across every home type, with the condo sector seeing the largest plunge in transactions, down -28.1%.

Home sales and price by home type

June 2024 home sales and price by home type.Toronto Regional Real Estate Board

More rate cuts needed to entice buyers

Overall, the conditions reflect a market holding its breath for lower mortgage rates, as supported by recent polling conducted by the board.

“As borrowing costs decrease over the next 18 months, more buyers are expected to enter the market, including many first-time buyers,” stated Toronto Regional Real Estate Board (TRREB) President Jennifer Pearce. “This will open up much needed space in a relatively tight rental market." 

While the Bank of Canada decreased its benchmark cost of borrowing by 0.25% in its June 5th rate announcement – in turn lowering Canada’s prime and variable mortgage rates – interest rates remain historically high. Combined with average home prices well above the million-mark in Canada’s biggest markets, affordability has been pushed to the brink for many buyers. The quarter-point cut that's been passed down so far hasn’t offered much in terms of relief.

However, compared to last year, today’s market conditions are a tad bit friendlier for buyers, says TRREB Chief Market Analyst Jason Mercer.  

“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,” he says. “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.”

Prices stayed flat in 416, but down in 905 markets

June 2024 home sale, price, and new listings.Toronto Regional Real Estate Board

Home prices stayed roughly unchanged within the City of Toronto in June, despite a -20.6% decline in sales (with 2,236 homes sold) and a 17.4% influx of new listings (6,820 homes added to market). The average home price, however, marked a slight 1.7% gain, to an average of $1,173,781.

This wasn’t the case in the surrounding “905-area” markets. There, the average home price slid -3.5% to an average of $1,155,637, following a -13.7% decrease in sales (3,977 properties), and the addition of 11,144 new listings (up 9.3%).

A July rate cut isn’t a sure bet

Following the BoC’s June rate cut, market watchers are keenly watching to see if there’s more downward action to come in July. However, that’s looking less likely following the May inflation report that surprised on the upside at 2.9%. As a result, markets have placed a 41% likelihood of another cut on the 24th of this month. However, this will rely heavily on the next inflation report – which comes out on July 16 – has to say.

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Penelope Graham, Director of Content

Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.