Toronto Home Sales Hit Lowest Point in a Year

(Bloomberg) -- Toronto saw the lowest number of homes trade hands in a year in June as the pandemic-fueled demand that drove the market to record highs starts to fade with immigration still muted.

Home sales in Canada's largest city fell 9.1% in June from the month before to 8,885 transactions, the third consecutive monthly decline, according to data released Tuesday by the Toronto Regional Real Estate Board. Despite the declining number of sales the seasonally adjusted average price of a home remained virtually unchanged last month at C$1.06 million ($859,890), the data show.

The Covid-19 pandemic helped make Canada's housing market among the hottest in the world over the last year as record low mortgage rates and increased demand for larger living spaces ran up against the persistent shortage of housing stock that has long plagued its largest cities. But now with lock down measures easing, vaccinations rising, and the economy picking up, the circumstances that created the boom are starting to ease, and the immigration-driven population growth that has long underpinned the country's housing market remains muted.

“The record pace of sales has run its course as pent-up demand has increasingly been satisfied in the absence of normal population growth,” said Jason Mercer the Toronto real estate board's chief market analyst, in a media release accompanying the sales data. “With this said, a persistent lack of inventory across most segments of the market will keep competition between buyers strong.”

Vancouver, Canada's priciest home market, showed a similar decline in June home sales from the previous month, though activity both there and in Toronto remains above where it was a year ago and elevated by historical standards. Toronto's record start to the year caused that city's real estate board to raise its forecast for average home prices in 2021 to C$1.07 million from the C$1.025 million it predicted in February.

Also in Toronto, in a reversal of the pattern seen for much of the last year, annual growth in condominium sales in June outpaced the sales growth for all types of ground-based homes, suggesting interest may be returning for the denser housing types the pandemic put out of favor, but are often the first choice of immigrants newly arrived to the country.

“We have seen market activity transition from a record pace to a robust pace over the last three months,” said the Toronto real estate board's president, Kevin Crigger, in the press release. “While this could provide some relief for home buyers in the near term, a resumption of population growth based on immigration is only months away.”