Greater Toronto Area Home Sales Dip in April Amid High Interest Rates

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Home sales in the Greater Toronto Area dropped for a third consecutive month in April, while prices inched up. This trend was driven by record-high interest rates, which dampened the housing market’s recovery in Canada’s primary metropolitan region. According to data from the Toronto Regional Real Estate Board (TRREB) released on Thursday, seasonally adjusted sales declined by 3.4% in April compared to the previous month, following a 2.4% drop in March.

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Average home prices rose by 1.5% last month to C$1.12 million ($819,072.69), the highest level since December. Meanwhile, new listings decreased by 5.9%. The surge in home sales observed in December and January, signaling a market revival in anticipation of interest rate cuts by the Bank of Canada, lost momentum in February. This was due to slower-than-expected cooling in inflation and a relatively robust economy, which pushed back expectations of a rate cut.

Economists and analysts anticipate the Bank of Canada (BoC) to implement its first 25-basis-point rate cut in June or July. The BoC has maintained its key overnight rate at a near 23-year high of 5% since July of the previous year.

On a year-over-year basis, sales decreased by 5% last month, primarily due to the base effect of April 2023 when the market experienced a temporary resurgence, TRREB noted. New listings increased by 47.2% annually, providing homebuyers with more options.

TRREB President Jennifer Pearce commented, “While sales are expected to pick up, many would-be home buyers are likely waiting for the Bank of Canada to actually begin cutting its policy rate before purchasing a home.” Money markets are currently indicating a more than 50% chance of a rate cut in June, with a cut in July being fully priced in.

TRREB Chief Market Analyst Jason Mercer added, “Lower borrowing costs will prompt tighter market conditions in the months to come, which will result in renewed price growth, especially as we move into 2025.”

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