Toronto real estate roars back to life in October as sales rise 44%

Home buyers returned to the housing market with renewed enthusiasm in October, as lower interest rates improved affordability and eased mortgage costs.

The Toronto Regional Real Estate Board (TRREB) reports that sales jumped a scorching 44.4% compared to October 2023, with a total of 6,658 homes trading hands. That also marks a robust 33.2% increase from September’s sales activity.

Buyers are now enjoying the cumulative effects of four rate cuts from the Bank of Canada, which have lowered the benchmark cost of borrowing from a historic high of 5% – where it lingered between July 2023 to this June – to 3.75%. As a result, variable mortgage rates have decreased. Fixed mortgage rates have also trended lower, as the bond market has reacted favourably to the central bank’s downward trajectory. 

That’s translated to an easier borrowing environment, says TRREB President Jennifer Pearce, which has coaxed a number of hesitant buyers back into the market.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” she states in TRREB’s release. “The positive affordability picture brought about by lower borrowing costs and relatively flat home prices, prompted this improvement in market activity.”

A well-balanced market – for now

That boost in buying activity was combined with a slight pullback in the number of newly listed homes; a total of 15,328 properties were brought to market in October, up 4.3% on an annual basis, but dropping by -15.2% from September levels. That led to slightly tighter market conditions, which put slight upward pressure on prices. The average Toronto home price came in at $1,135,215 in October, up 1.1% year over year, and up 2.5% month over month.

Overall, though, the Toronto real estate market remains well-supplied, with decent options for house hunters; the overall number of active listings still sits 25.3% higher than it did last year, with a total of 24,481 homes available for sale. However, these well-balanced conditions are likely to be short-lived, says TRREB Chief Market Analyst Jason Mercer, as interest rates fall further, and buyer demand heats up.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for home buyers,” he states. “This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

It is largely expected by economists that interest rates will continue to fall through the next year; many call for a second consecutive half-point decrease from the BoC in its December announcement, to follow the one it doled out in late October. Should that occur, the BoC’s benchmark rate could be as low as 3.25% heading into January, with potentially another 75-points in cuts to come in 2025 before landing at a terminal rate of 2.5% by the fourth quarter of next year.

Single-detached houses in highest demand

Source: Toronto Regional Real Estate Board

Sales were up strongly across all home types in October, even in the beleaguered condo segment, which has suffered in months due to excessive supply. The largest increase in sales volume was seen in the townhouse segment which, with 1,123 sales, rose by 56.8%. However, single-family detached houses remained the most common type of home sold, with 3,139 trading hands, at an average price of $1,462,838. Home prices rose within the semi-detached segment, up 0.7% to an average of $1,108,376, but dropped for townhomes and condo units.

Sales up strongly across TRREB region

Toronto Regional Real Estate Board

Sales boomed across all of the regions tracked by the board, with strong activity both within the City of Toronto, and in the surrounding “905-area” markets. Within the 416, a total of 2,509 homes sold, marking a 37.6% increase. The average home price in the city remains increased by 3.8% compared to the same month in 2023, to $1,165,660. A few more sellers came to market over the course of the month, with new listings rising by 3.3% with 5,959 units.

Within the 905 region, a total of 4,149 homes traded hands, driving a 48.8% year-over-year increase. However, prices were relatively flat, dipping -0.6% to $1,116,805 on an annual basis, while new listings rose by 4.8% with 9,369 homes brought to market.

What can home buyers expect in the coming months?

With interest rates poised to dive lower, demand will continue to pick up, as many buyers have been awaiting cheaper mortgage costs before making a move. That will likely put upward pressure on home prices, and increase market competition in the coming months. Current market conditions could present an affordability sweet spot as supply remains plentiful, with a number of motivated sellers who’ve been waiting out the previous doldrums of the 2024 market.

Also read:

• Bank of Canada cuts target interest rate by 0.5% in October announcement
• The Overnight Lending Rate in Canada
• Housing affordability in Canada
• US Federal Reserve cuts rate by 0.25% in November announcement