A house for sale in the Leaside neighbourhood of Toronto on May 16.Ammar Bowaihl/The Globe and Mail
Toronto’s housing market waned in August with sales falling for the third straight month, as higher borrowing costs made it more expensive for buyers to get a mortgage.
The volume of home resales in the Toronto region fell 1 per cent from July to August after removing seasonal influences, according to the Toronto Regional Real Estate Board (TRREB), though the decline was not as steep as the previous two months.
Activity has slowed since the Bank of Canada resumed raising interest rates in June after a four-month break earlier this year. That made it harder for would-be buyers to qualify for a mortgage and reduced the amount they could borrow.
“This could prompt these buyers to make an offer on a home less than the asking price,” said Jason Mercer, TRREB’s chief market analyst. “Not all sellers have chosen to take lower than expected selling prices, resulting in fewer sales.”
The Home Price Index, which excludes the most expensive transactions, fell 0.1 per cent to $1,163,700 from July to August on a seasonally adjusted basis. That was the first decline since March, when homebuyers flooded the market after the central bank announced it would take a break from raising interest rates.
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The city of Toronto recorded the greatest monthly decline, falling 2 per cent on a non-seasonally adjusted basis. The suburbs of Toronto, which saw home prices increase significantly during the pandemic’s real estate boom, also recorded similar declines. Peel, to the northwest of the city, and Durham, to the east, both decreased by 2 per cent over the same period.
However, when compared with a year ago, the Home Price Index was up 2.4 per cent across the Toronto region.
The number of new listings continued to climb when adjusted for seasonal influences, rising 1.3 per cent last month. That was the fifth straight month of increases.
TRREB said there would be continued volatility in the market as “buyers and sellers wait for more certainty on the direction of borrowing costs and the overall economy.”
Analysts expect the Bank of Canada to keep the benchmark interest rate at 5 per cent owing to signs that the economy is slowing. The bank is due to make its scheduled interest-rate announcement on Wednesday.
In Vancouver, the higher interest rates also contributed to the region’s real estate slowdown. The number of sales fell 6.5 per cent from July to August and was 14 per cent below the 10-year average, according to the local board.
Fewer Vancouver homeowners put their properties up for sale, sending listings down 15 per cent. The Home Price Index decreased by 0.2 per cent to $1,208,400, with higher prices for detached houses offsetting declining values for condos and semi-detached houses.