Toronto Home Sales Jump, But Still 3rd Worst May In 25 Years

Toronto real estate is showing encouraging data, but is it a return to normal or the “return to normal” bubble experts warn of? Toronto Regional Real Estate Board (TRREB) data shows home prices climbed in May. It was accompanied by a big jump in sales and a significant cut to inventory. As inspiring as these data points are, better than bad isn’t the same as good. Last month was still one of the weakest Mays in at least 25 years. 

The price of a typical home climbed 0.25% (+$2.4k) to $946,500 in May, marking a fourth consecutive move higher. Prices remain 6.68% (-67.8k) lower than last year, and 26.0% (-$333.3k) below the record high set in February 2022. Certainly an improvement, but we’re far from anything that even resembles a recovery.  

Greater Toronto existing home sales climbed to 6,583 in May, up 6.3% from last year. Detached sales (+9.0% y/y) were the driver, but condos (+4.6%) and townhouses (+4.2%) both made solid improvements. That sounds great until we zoom out for a little more context, and realize this is still weaker than May 2024. In fact, as the chart above clearly shows, last month was still the third-weakest May in the past 25 years. 

The inventory peak may be behind Toronto real estate, though it can still be seen in the rearview mirror. TRREB saw 17,698 new listings in May, down 18.9% from last year—fewer new sellers, but still double 2020’s lows. The sales-to-new-listings ratio (SNLR) is 37.2%, which is still a buyer’s market but close to balanced.

The inventory picture is a little more complicated when factoring in active listings. The MLS had 26,927 active listings for sale in May, down 13.3% from last year. Once again, this is a sharp drop, but from a really high place. Last month was still the second-biggest May for active listings since 1996. The average first-time buyer in the region was still in the single digits back then. 

The market made solid progress, potentially signalling that the worst is behind it. Prices and sales climbed, while inventory fell—all progress towards a healthier market. Rising prices also motivate buyers and can help move the needle for that pent-up demand. However, it’s worth viewing this with cautious optimism.

Last month’s numbers aren’t far off from where the slump kicked off. Prices are volatile, with low sales volumes and a lack of market validation. The climb may show that prices are rising, or a relatively small pool of buyers at the top end of the market is buying. The data also comes shortly after Canada entered a technical recession. Policymakers can squabble over the definition of recession, but there’s little debate that the economy is stalling. That’s not traditionally a driver of sentiment for making large purchases.