Sales of new construction homes slowed down in July, while the overall supply of new homes continued its unprecedented decline and prices of available homes continued to increase, the Building Industry and Land Development Association (BILD) announced today.
There were 1,752 new home sales in July, according to Altus Group, BILD’s official source for new-home market intelligence. That was significantly fewer than a year ago, well below the 10 year average and down from the brisk pace of recent months.
BILD President and CEO Bryan Tuckey cautioned against reading too much into the dip in sales. “July is typically a slow month and many builders wait until fall to launch developments and bring product to market. We are not seeing an increase in unsold product sitting on the market,” said Tuckey, adding, “in fact we are seeing new housing supply continue to shrink from what are already depleted levels.”
The supply of new housing is often measured by the amount of new housing that is available for purchase in builders’ inventories at the end of the month. In July, builder inventories in the GTA dropped to 7,801 units, another new low. A year ago there were 16,900 new homes available to buyers in the GTA and a decade ago there were 28,358 new homes.
While the number of low-rise single-family homes, which includes detached and semi-detached houses as well as townhomes, increased by about 100 homes to 1,713, the supply of multi-family condo apartments in high-rise and mid-rise buildings and stacked townhomes dropped to 6,088 units. A year ago there were 15,298 of these types of homes available to prospective purchasers.
Prices of the new homes available in builders’ inventories continued to increase in July. The average price for available new low-rise single-family homes was $1,316,693, up from June’s $1,250,262 and 45 percent more than a year ago when the average price was $906,508.
Meanwhile, the average price of available new condo apartments in high-rise and mid-rise buildings and stacked townhomes in the GTA was $665,041 in July. That is a 40 percent increase from a year ago and up $38,000 from June’s average price.
The price increases for available new condo apartments in the GTA were the result of both increases in average unit size and growth in the price per square foot. The average unit size in July was 871 square feet, whereas a year ago it was 801 square feet. The average price per square foot last month was $764, up significantly from the July 2016 average of $594.
Sales of new multi-family condo apartments in high-rise and mid-rise buildings and stacked townhomes were down from the record high volume of recent months, but the 1,615 units sold were still four percent above the 10 year average for July sales.
Condo apartments accounted for 92 percent of July’s new home sales in the region. Sales of low-rise single-family homes, which includes detached and semi-detached houses as well as townhomes, were down dramatically. There were only 137 sales recorded last month, which is the fewest seen in decades in the GTA.
“You can’t buy what isn’t there”, said Patricia Arsenault, Altus Group’s Executive Vice President of Research Consulting Services. “There are typically few new home project openings in July and this year was no exception. And among the limited number of new single-family homes available to purchase in builder inventories, the majority are simply not affordable to most potential buyers. Trying to find a new single-family home today in the GTA priced at less than $1 million is a daunting task.”
“One month does not a trend make,” said Tuckey. “While overall sales may have slowed down a bit in July, it is likely that things will pick up again in the fall as more product comes to the market, and despite the dip in July we are on pace for a record year for new home purchases in the GTA.”
As of the end of July, 30,727 new homes had been purchased in the GTA, which is almost 2,000 more than at the same point last year and well above the 10 year average of 22,680. Multi-family condo apartments in high-rise and mid-rise buildings and stacked townhomes accounted for almost 80 per cent of 2017 year to date sales with 24,411 units sold.