Toronto home prices rise in May as sales jump 20 per cent

TORONTO — Greater Toronto Area (GTA) home prices increased in May from April and sales rose sharply, adding to evidence that the housing market is recovering after a year-long slump, a factor that could support additional Bank of Canada rate hikes.

The average price of a GTA home rose to nearly C$1.2 million ($892,193) in May, up 3.7 per cent from April, Toronto Regional Real Estate Board (TRREB) data showed on Friday.

It was the fourth straight month of gains, while the nationwide market has also picked up in recent months.

Signs of recovery in the housing market could fuel inflation. The BOC has left its policy rate on hold at a 15-year high of 4.50 per cent since January but says it is prepared to tighten further to return inflation to its 2 per cent target.

Money markets see a roughly 40 per cent chance that the central bank will hike rates when it makes its policy decision next Wednesday.

On a year-over-year basis, the average home price remained lower, but the pace of decline slowed to 1.2 per cent from 7.8 per cent in April. The average price was 10.3 per cent below the February 2022 peak.

Meanwhile, higher borrowing costs for developers have contributed to a slowdown in Canada’s residential construction activity, which could thwart government plans to reduce a housing shortfall.

“The supply of listings hasn’t kept up with sales, so we have seen upward pressure on selling prices during the spring,” said Jason Mercer, chief market analyst at TRREB.

New listings fell 18.7 per cent year-over-year in May. In contrast, sales rose 24.7 per cent on an annual basis and were up 20 per cent from April.