New home market sees short-term relief in April but fundamental challenges remain

Greater Toronto, May 23, 2018 – In April the new home market in the GTA saw lower sales and an increase in remaining inventory, as well as a decrease in prices, the Building Industry and Land Development Association (BILD) announced today.

There were 1,727 total new home sales in April, according to Altus Group, BILD’s official source for new home market intelligence. It was the lowest number of sales for April in over 20 years. Single-family home sales, with 502 detached, linked and semi-detached houses and townhouses (excluding stacked townhouses) sold, were down 65 per cent from last April and down 70 per cent from the 10-year average. Condominium apartments in low, medium and high-rise buildings, stacked townhouses and loft units accounted for 1,225 new home sales, down 65 per cent from April 2017 and down 38 per cent from the 10-year average.

“While home-buying intentions remain strong, a combination of challenges is keeping many interested buyers out of the new home market this spring,” said Patricia Arsenault, Altus Group’s Executive Vice-President, Research Consulting Services. “First-time buyers need to save longer to qualify for a mortgage, and potential move-up buyers are faced with a bigger gap than a year ago between the price of a newly-built home and the price they can get for their existing home.”

The lower number of sales, combined with a number of new project openings that was typical for this time of year, meant that remaining inventory increased for both single-family homes and condominium apartments in April, with total new home remaining inventory at 14,297 units. This included 9,958 condominium apartments and 4,339 single family homes. While this is an improvement by 14.8 per cent over the previous month’s 12,457 remaining units, it is still only about five months’ worth of inventory, while a healthy new home market would have nine to 12 months’ worth of inventory, based on the pace of sales in the past 12 months.

The benchmark price for new single-family homes decreased in April to $1,151,815, which was down 5 per cent over the last year, and the benchmark price for new condominium apartments decreased to $739,965, which was 29.8 per cent above last April.

“It is obvious that government action is having an impact on demand in the new home market,” said David Wilkes, BILD President and CEO. “We have 115,000 new residents coming to the GTA every year and we need to be building 55,000 new homes annually to meet their housing needs. Government policy needs to recognize the need to increase housing supply as part of a long-term solution for our region.”

April New Home Sales by Municipality**:

Source: Altus Group

*Altus Group should be credited as BILD’s official source of new home market intelligence.

**Historical data are subject to revisions. 

Source: BILDGTA.ca