A condo building under construction in Toronto on July 13, 2022.Carlos Osorio/Reuters
Toronto home sales fell in July despite a second recent interest rate cut, as inventory piled up and sapped the motivation of buyers to make purchases.
Although buyers had been waiting for the Bank of Canada to cut rates, the slightly cheaper cost of mortgages has not spurred a flurry of activity.
Instead, homeowners have been putting their homes up for sale, especially those who own condos. Active listings, or the amount of inventory up for sale, are at the highest level since the 2008-09 financial crisis.
Meanwhile, the number of home sales fell 1.7 per cent from June to July after accounting for seasonal influences, according to the Toronto Regional Real Estate Board. Sales have declined in five of the past six months on a seasonally adjusted basis.
In July, fewer homeowners put their properties up for sale, but there were still nearly 24,000 homes up for grabs across the Toronto region. At the same time, home prices barely budged. The home price index for the region, which removes the most expensive transactions, was $1,089,800 last month. That was 0.1 per cent higher than June on a seasonally adjusted basis and 5 per cent lower than July of last year.
Because home prices have been steady and because there is a high volume of homes for sale, buyers believe they have more time to shop for a property.
“It’s not putting pressure on buyers to get in now,” said Karen Yolevski, chief operating officer of Royal LePage Real Estate Services Ltd. “Buyers will jump in when they see prices start to rise,” she said.
However, Ms. Yolevski said realtors are seeing an increase in showings, which she said is an early indicator of sales activity. Showings are picking up for people trying to sell single-family homes but not for high-rise condos.
Prospective buyers are even less motivated to purchase a condo given the amount of supply on the market. Last month, there were nearly 9,000 active condo listings, which is a record high. Owners are trying to sell their condos as a slew of new units are also being completed this year.
Over all, the real estate board predicted sales will pick up in the fall. Mortgages are becoming cheaper with every interest rate cut and the central bank is widely expected to cut its 4.5 per cent benchmark interest rate again.
“Expect sales to accelerate as buyers benefit from lower monthly mortgage payments,” board president Jennifer Pearce said in a news release.