Toronto home sales surge over 40% in November as rates drop

The final months of autumn proved to be brisk for Toronto real estate, with year-over-year sales activity rising by over 40% for the second month in a row in November. 

According to the Toronto Regional Real Estate Board (TRREB), a total of 5,875 homes were sold across the Greater Toronto Area, marking a 40.1% increase from the same time period in 2023.

Surging sales were due to lower interest rates and overall improved affordability, says TRREB; November conditions reflected four consecutive rate cuts from the Bank of Canada, which has lowered the nation’s benchmark cost of borrowing from a high of 5% to 3.75%.

Also read: National home sales rise 30% in October

“As we approach the end of 2024, I am pleased to report an improvement in housing market conditions. Many home buyers patiently waited on the sidelines for reduced inflation and lower borrowing costs. With selling prices remaining well off their historic peak and monthly mortgage payments trending lower, the stage is set for an accelerating market recovery in 2025,” said Toronto Regional Real Estate Board (TRREB) President Jennifer Pearce.

That increase in demand meant home buyers experienced more competition within the marketplace than in recent months. While the supply of new listings increased by 6.6% (representing a total of 11,592 homes brought to market), that was at a much lower annual rate than in 2023, the board points out, which pushed home prices up by 2.6% to an average of $1,106,050. 

The HPI benchmark, which measures the most typical type of home sold, with the high and low extremes stripped out, dipped by -1.2% – a “much smaller rate of decline than seen in previous months,” states TRREB’s release.

Buyer demand is strongest for detached houses

The fact that average price growth outstripped the benchmark was largely due to a greater proportion of pricier single-family houses sold compared to last year, says TRREB. Detached homes led activity in terms of volume, with 2,669 sales, marking a 43.9% year over year increase. Condo sales have picked up from their recent doldrums, with a total of 1,640 units sold, up 36.3% year over year - first time buyers reentering the market says TRREB, as lower interest rates and ample inventory provide some of the best buying conditions seen in years.

Semi detached home sales increased 24.9% with 502 homes sold, while townhouse sales increased by 46%, with 1,009 units sold.

“Market conditions have tightened, particularly for single-family homes. The detached market segment experienced average annual price growth above the rate of inflation, particularly in the City of Toronto. In contrast, the condominium apartment segment continued to experience lower average selling prices compared to a year ago. Condo buyers are benefitting from a lot of choice and therefore negotiating power. This will attract renter households into homeownership as borrowing costs trend lower in the months ahead,” said TRREB Chief Market Analyst Jason Mercer.

Home sales up strongly across the GTA

Sales surged at an even rate across the TRREB-area markets; a total of 2,236 homes traded hands within the City of Toronto, marking a 40.5% year-over-year increase, while 3,639 transactions occurred in the “905-area” markets, reflecting an uptick of 39.8%.

Home prices rose at a slightly higher clip in the 416, rising 3.4% to an average of $1,080,167 – reflecting a dollar difference of $25,743 spent on the average home. Price growth in Toronto was underpinned by the fact that inventory remains tight, with new listings edging up just 1.9% annually, with 4,360 homes brought to market.

In contrast, the 905-area markets saw the fresh supply of homes for sale increase by 9.7%, with 7,232 units hitting the market. Price growth, meanwhile, increased by 2.1% year over year, with homes in the region costing an average of $1,121,954 – a difference of $23,607.

What’s next for mortgage rates?

The Bank of Canada is poised to slash its trend-setting interest rate once more in 2024, on December 11, meaning home buyers can expect mortgage rates to fall further – at least in the short term.

Following a much weaker-than-expected Canadian jobs report released on December 6, the odds have increased that the central bank will deliver a half-point cut, rather than a quarter. Should this materialize, it will bring Canada’s Overnight Lending Rate – which sets the pricing for lenders’ prime rates and variable-rate borrowing products – to 3.25%. Further decreases are also expected to play out in 2025, with economists’ consensus calling for the Bank’s rate to settle around the 2.5% range by the middle of the year. 

This is set to drive more buyers into the market, and cause prices to rise further; according to a recent forecast from Royal LePage, Toronto-area home prices could increase by 5% to an average of $1.22 million by the end of 2025.

The bottom line: Economic uncertainty in 2025

However, there are a few wrenches that could be thrown into the central bank’s plans. Its rate cutting path depends largely on whether inflation remains within its 2% target, and whether economic growth doesn’t chill too quickly. However, wild cards such as threatened 25% trade  tariffs from President-elect Donald Trump, and growing doubts over the US Federal Reserve’s own cutting trajectory could shake up the economic scene in the coming months. 

Also read:

• Bank of Canada cuts target interest rate by 0.5% in October announcement
• Bank of Canada rate cuts lead to improved affordability in October
• National home sales rise by 30% in October
• Toronto real estate roars back to life in October as sales rise 44%
• Canadian inflation increases to 2% in October
• How a second Donald Trump term will impact the Canadian economy