Homebuyers have finally returned to the newly built housing market
GTA homebuilders say sales are starting to bounce back after interest rate hikes put the industry on pause for most of the past year.
Sales of new construction single-family homes rose 81 per cent year over year in April, the Building Industry and Land Development Association (BILD) reported on Wednesday.
Although the 1,064 sales of detached, semi-detached and townhouses remained 16 per cent below the 10-year average, it was a significant increase from the 384 sales of those homes in March this year.
The 1,327 condos and stacked townhouses that sold last month was a 57 per cent drop from April 2022 and 39 per cent beneath the 10-year average.
BILD CEO David Wilkes said the short-term pickup in sales is a reflection of two issues, including the continued high demand for housing in the Toronto region.
We had anticipated with interest rates stabilizing that people are returning to the market when they have certainty of costs," he continued.
Edward Jegg, research manager with Altus Group, which tracks new construction home sales and prices for BILD, said, The fundamentals had pointed to a rebound in April and that strength is expected to continue through the spring market."
New construction homebuyers can find themselves in difficulty when interest rates rise and the market corrects as it has in the last year. They can't sell their homes for as much as they expected when they bought pre-construction and then their new home loses value between the time when they agreed to the purchase and the time when it is actually complete.
The benchmark price for new single-family homes declined 1 per cent year over year to $1.77 million, down from about $1.8 million in March. Condo prices also fell slightly, 7.3 per cent on a year over year basis, to about $1.10 million from $1.12 million month over month.
The benchmark price is based on the mix of homes coming on the market in April and a slight increase in inventory levels, said Wilkes.
Builders have seen a 30 per cent increase in labour and construction costs in the last two years, he said.
Wilkes said he expects demand will continue to surge this year unless the Bank of Canada decides to bump lending rates again.
Now is not the time to suggest that this market is anywhere near being balanced," he said. Now is the time to continue the efforts to deliver housing to the market because we don't want to find in a few year's time that we are in a market that is horribly out of balance because we didn't take the necessary steps."
Tess Kalinowski is a Toronto-based reporter covering real estate for the Star. Follow her on Twitter: @tesskalinowski