A Toronto-area builders' association is sounding the alarm about the ongoing decline in pre-construction home sales across the Greater Toronto Area (GTA) and the far-reaching implications it could have on the region's future housing supply.
New home sales in the GTA , which includes York Region, remained extremely low in December, part of a decline in sales that defined 2024, the Building Industry and Land Development Association (BILD) said Monday.
There were 160 new single-family homes sold in the GTA last month and 150 condo units, according to BILD, a 40-year low.
For 2024 as a whole, there were 9,816 total new home sales, down 47 per cent from 2023 and 69 per cent below the 10-year average, according to a report released Monday.
BILD said skyrocketing construction costs, soaring financing rates and increasingly high municipal development fees have made it financially impossible to build homes that can be sold at a profit in today's market.
"Sales have plummeted and housing starts are sliding — and will continue to follow the sales trajectory. Without immediate action from governments to reduce development charges and municipal fees, the future housing supply of the GTA is in peril,” said Justin Sherwood, senior vice-president of communications, research and stakeholder relations at BILD.
The provincial government has set its sites on building 1.5 million homes by 2031 to address Ontario's high prices and home shortages. However, much of that effort depends on condo developments that pre-sell units before embarking on construction.
“We are literally watching the foundation of the next housing crisis being laid today. December’s new home sales and the low new home sales seen throughout 2024 in the GTA illustrate the problem the region is facing adding new housing supply,” said Sherwood.
Inventory high, buyers uninterested
GTA real estate watchers would have to look back to 1990 to find a year when fewer new homes were sold, according to Edward Jegg, research manager at Altus Group.
“As 2025 begins, new home buyers remain unwilling to re-enter the market despite lower mortgage rates, falling prices, and elevated inventories,” Jegg said.
There were 16,967 new condos on the market in December, according to BILD, as well as 4,820 single-family dwellings. This is roughly 14 months worth of inventory, per the group.
The 150 condo units sold in December marked a 63 per cent decline from December 2023 and was 86 per cent lower than the 10-year average.
“While the resale market has shown some signs of life thanks to lower rates, new builds are continuing to face a ‘cost to build’ challenge," said Sherwood.
The benchmark price for new condos in December in the GTA was $1,018,170, or $1,334 per square foot, which is significantly higher than many units on the resale market. That price point declined by 2.8 per cent since 2023.
The benchmark price for new single-family homes was $1,551,228, down 3.4 per cent over the last 12 months.
In Toronto, just six pre-construction homes were sold last month, as well as 78 condos.
The association says the building and renovation industry provides 256,000 jobs in the GTA and $39.3 billion in investment value.