Home sales in the Greater Toronto Area (GTA) fell 38.8% in May compared to a year earlier, as
higher interest rates on mortgages begin to impact Canada’s biggest housing market.
A total of 7,283 properties were sold in the GTA during May, according to data released by the
Toronto Regional Real Estate Board (TREB). It also represented a 9% decline from April. It’s
the second month in a row where sales were down on both a monthly and annual basis.
All property types, ranging from detached homes to townhouses and condos, posted significant
double-digit sales declines compared to May 2021. The data also showed that active listings
jumped 26% year-over-year in May, while the number of newly-listed homes was flat.
The shifting dynamics of the market come as the Bank of Canada aggressively raises its
benchmark interest rate. That, in turn, is leading to higher mortgage rates that make it less
affordable to purchase a home for many Canadians.
The Bank of Canada hiked the target for its overnight interest rate by a half-percentage point
earlier this week, taking it up to 1.5%. Deputy Governor Paul Beaudry said the central bank’s
key lending rate could rise above 3% this year to bring down inflation.
With buyers wielding more negotiating power, the average selling price of a home fell roughly
3% to $1,212,806 in the GTA on a non-seasonally adjusted basis. It’s the third straight month
where the average selling price declined after hitting a record high of $1,334,544 in February of
this year.
