Something happened in the new construction market this summer that deserves more attention than it got. In August, 692 new single-family homes sold across the GTA. A year earlier, that number was 215. Sales have more than tripled from last year's historic low, and August came in 47 per cent above the ten-year average, according to figures prepared by Altus Group for BILD, the Building Industry and Land Development Association, and reported in the Toronto Star on September 22.
The HST Rebate Is the Reason
Numbers like that don't move on their own. The push is coming from the HST rebate on new homes that the federal and provincial governments brought in this past April. It's a one-year program, and it was designed as a lifeline for a building industry that had spent two years stuck between a backlog of unsold supply and a stubborn price gap between new homes and resale. BILD reports five straight months of rising low-rise sales since the rebate arrived, and year-to-date single-family sales now sit at 5,550 - more than double last year's record low, and roughly in line with the ten-year average.
To understand why it's working, remember where new construction was sitting. From the 2022 peak to the end of last year, new single-family prices had already fallen about 25 per cent, and even then almost nothing was moving. The rebate closed enough of the remaining gap to get buyers signing again. The benchmark price for a new single-family home was $1.25 million in August, down 14.6 per cent from a year earlier - and that's the gross price, before the rebate comes off.
Builders are responding in a particular way: townhomes. Across the GTA, townhomes are taking a much larger share of single-family sales than the historical pattern would suggest, because builders are pricing them to make the most of the rebate. We see it around here as well. The townhome sites in Cornell and up through Victoria Square are exactly the kind of product this program was built to move.
Condos are a different story. There were 215 new condo sales in the GTA in August. That's double a year ago, but still 78 per cent below the ten-year average, and a long way from the 3,149 units that sold in August of 2021. The rebate hasn't done much for condos because the program's rules around construction start and completion dates make it hard for most projects to qualify. If you've been reading about trouble in the condo market, this is another chapter of the same book.
And before anyone declares a boom, one more number matters. At the current pace of sales, it would take 38.5 months to clear everything builders have on the market. A healthy market clears in nine to twelve. Buyers still hold the stronger hand, and they will for a while yet.
So what do I take from all of this? If you looked at new construction two or three years ago and walked away because the sticker made no sense next to resale, the arithmetic has changed. Prices are down meaningfully from the peak, the rebate comes off the top, builders are motivated, and there is more finished and nearly finished inventory to choose from than I can remember seeing in a long time in this business. The rebate runs for one year, which puts a quiet clock on the whole thing.
It matters on the selling side too. Every sharply priced new townhome is competition for a resale one, and pricing a listing this fall without accounting for that is leaving the job half done.
If a new build has been somewhere in the back of your mind, this is a sensible season to look again. Send me a note about any project you're curious about and we'll go through the real numbers together, rebate and all.