In April, the GTA’s new home market saw lower sales amid an increase in remaining inventory and declining prices, reports the Building Industry and Land Development Association (BILD).
In total, there were 1,727 new home sales in April, the lowest number of sales reported for the month in over two decades, according to Altus Group, BILD’s official source for new home market intelligence.
There were 502 single-family homes sold in April 2018, consisting of detached, linked and semi-detached houses and townhouses (excluding stacked townhouses), a decrease of 65 per cent year-over-year and 70 per cent below the 10-year average. Condominium apartments in low, medium and high-rise buildings, stacked townhouses and loft units accounted for the other 1,225 new homes sold, a decline of 65 per cent compared to April 2017 and 38 per cent below 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, executive vice-president of research consulting services at Altus Group, in a press release. “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 sales figures, combined with a number of new project openings typical for this time of year, meant that remaining inventory for the month of April increased for both single-family homes and condominium apartments, with total new home remaining inventory at 14,297 units. This includes 9,958 condominium apartments and 4,339 single-family homes.
Although this is an improvement of 14.8 per cent compared to March 2018’s remaining inventory of 12,457 new homes, it is still only about five months’ worth of inventory. A healthy new home market would have nine to 12 months’ worth of inventory, based on the pace of sales over the past 12 months.
The benchmark price for new single-family homes in April fell to $1,151,815, a decrease of five per cent year-over-year. The benchmark price for new condominium apartments dropped to $739,965, which is up 29.8 per cent compared to April 2017.
“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.”