May’s New Home Sales

Stop the presses new homes sales are back…if you focus only on the suburbs and ignore the stalled prices. The May totals from BILD GTA are in and new homes sales had a banner month. Total sales nearly doubled the same month last year and even outperformed the ten-year average. However, breaking down the sales numbers we see that Toronto was essentially flat over last year. All of the gains were actually realized in the suburbs, drawing light to a trend that has been developing through the first half of the year: suburban new home sales are growing, not really Toronto’s.

new home sales maySource: BILD – Altus, Six Housing Sense

The overall sales numbers show 2019 has gone from worst to first in a matter of just four months. After posting a terrible February the results have only been improving, with May posting the best monthly result in years. In total for the first five months, 2019 remains below the recent average; however, sales are quickly making up for the slow start and are on a much better pace.

The sales improvements were realized in both single-family and condo segments. Compared to 2018, single-family home sales nearly tripled, growing from just 342 to 1,012 last month. Condos vaulted higher as well, improving from 2,003 last year to 3,790.

new home prices juneSource: BILD – Altus, Six Housing Sense

Despite the improving sales, prices continued to experience challenges. Condo prices did rebound in May, improving to $779,687, but they remain slightly below their peak price when new condo prices broke $800,000 in January. Single-family home prices remain stuck in a downward trajectory, as prices dropped to $1,109,501. This puts prices down 3% year-over-year and 15% below the 2017 peak. It will be worth watching to see if they fall below $1.1 million over the summer months or not.

YoY new home sales TO SubSource: BILD – Altus, Six Housing Sense

Shifting back to the city versus suburb new home sales performance, the above graph shows the recent improvement in sales is attributed predominately to the suburban markets. Other than in April, Toronto has been roughly even or below 2018’s sales numbers. In comparison, the surrounding GTA has been spiking, with sales up over 200% year-over-year in May. As Toronto real estate is among the most expensive in the region, it will be interesting to see how prices react to this suburban surge versus city stall.

Questions remain, but the May new home sales results gave the industry a definitively good news story to tell for the month. Yes, prices are not moving like they used to be, and the distribution of where the sales growth is taking place is imbalanced; however, the GTA had not seen that good of a sales month in a long while. Whether it will truly count for something or not will be determined by whether it was a one off or the start of a revival trend.

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