Toronto home sales fell 2.1% year-over-year to 5,057, with a 1.3% drop from July. The average selling price declined 2.7% to $993,410, and the benchmark price dropped 4.5%. This marks the second time this year the average price fell below $1 million. Market slowdown is attributed to seasonal fatigue, but affordability has improved due to lower prices despite higher mortgage rates. Slow, steady price growth is expected.
Canada’s market showed early momentum, with resales improving, inventory flattening, and prices stabilizing as affordability and employment trends helped restore buyer confidence.
A key watchpoint is how quickly sidelined buyers return, as many postponed purchases yet now appear financially positioned to act on stronger savings and employment.
For 2026, the forecast called for resales ↓~4% to ~453K and benchmark prices ↓~2% to ~$794K, before modest gains returned in 2027.
Borrowing costs looked near lows, while the central bank was expected to hold rates; trade tensions and energy shocks remained key risks to momentum.
The forecast expected resales and prices to rise across all provinces in 2027, but described the broader recovery as irregular rather than transformative.
Toronto detached homes regained momentum in Late-Q2, as listing views, showings and offers picked up after a slower-than-usual market start this year.
Detached homes priced from $850K to $1.2M drew the strongest competition in Toronto, with some properties still attracting multiple offers from buyers.
The market stayed healthy from $1.8M to $2.2M, while homes priced $2.8M to $3.3M moved more slowly amid higher inventory levels in Toronto.
More first-time buyers entered Toronto's detached market recently, yet buyers stayed price-conscious and were prepared to leave negotiations when sellers held firm.
Toronto's detached inventory has been shrinking as buyers absorb more listings, a trend that could place upward pressure on prices if it continues.
In Canada, development fees can meaningfully raise new-home costs, and a national housing agency found cutting them could make some residential projects ~14% more viable.
Toronto and Vancouver showed major upside: eliminating charges could lift viable projects by ~10%, and Toronto alone could cover half its stated supply need.
Calgary's fees ranged from ~$4K for a one-bedroom high-rise to ~$9K for detached homes, well below Vancouver's ~$20K-$33K range for comparable units.
Development fees still fund roads, sewers, administration, and other infrastructure, so the national housing agency's economist said the optimal level is not zero.
Lower fees on family-sized homes could help projects compete in costly Canadian markets, where larger new units often exceed comparable resale homes and challenge families.
New home sales in Ontario surged 130% year-over-year in Q2 2026 after the provincial government cut the 13% Harmonized Sales Tax (HST) on new homes. Sales rose from 3,645 to 8,410, mainly driven by single-family homes. Condo sales increased slightly but lagged due to strict rebate eligibility timelines. The HST rebate, offering up to $130,000 off homes under $1.5 million, aims to boost housing starts, jobs, and economic growth before ending in March 2027.
Low-rise new home sales in the Greater Toronto Area have outperformed their 10-year average for the fourth consecutive month, driven by increased demand from the HST rebate program. In July, total new home sales reached 1,018 units, 40% below the 10-year average of 1,707. Single-family home sales rose significantly, exceeding the average by 50%, while condominium sales increased 40% year-over-year but remained 80% below average.
GTA condominium apartment sales rose 8.8% in Q2 2026 compared to Q2 2025, while new and active listings dropped by 19.0% and 15.4%, respectively. Market conditions tightened, but buyers still had negotiating power. The average selling price fell 7.5% to $634,972, with improved affordability and lower borrowing costs encouraging more buyers. Continued sales growth may lead to price stabilization and potential growth in 2027.
The Bank of Canada is currently holding at 2.25%, but several major-bank forecasts now anticipate gradual increases during 2027.
Stronger economic growth could give policymakers more room to normalize rates if inflation pressures remain persistent.
Higher rates would raise borrowing costs for households and businesses while potentially improving returns on savings and fixed-income investments.
Investors may need to prepare for a less accommodative environment, balancing improving growth against renewed interest-rate pressure.
Toronto helped lead recent affordability improvement as weaker home prices eased buyer pressure, especially in condos, though the city still remained among Canada’s toughest markets.
Sharply lower condo prices in Toronto rolled back much of the pandemic-era affordability damage, bringing condo values nearly back to their Late-Q4 2019 level.
Even after that condo-driven relief, Toronto’s overall market stayed deeply strained, with single-detached ownership costs still consuming >80% of a typical household’s pre-tax income.
The current Toronto outlook suggests affordability stopped worsening, but meaningful new relief may depend more on income growth than cheaper mortgages or further price drops.
If home prices and borrowing costs stay largely stable, Toronto buyers may see slimmer affordability gains ahead, making budgeting and product choice increasingly important.
Central bank researchers found lower rates lift housing demand quickly while supply responds much later, showing why cheaper borrowing alone does not resolve affordability pressures.
In Canada, resales rise soon after cuts, with the full boost appearing 18 to 24 mo later; housing starts begin gaining around 2 yr later.
Researchers said strong labour markets can amplify the effect, as households feel less cautious about savings and easier lending conditions help support faster buying.
Builders respond later because higher prices and lower financing improve project viability, while planning and permits take time, especially for multiple-unit homes.
For Canada, rate cuts can add supply eventually, but because supply follows demand, researchers said monetary policy is not the best affordability tool.
