Toronto’s New Home Market Hits Historic Lows as Industry Calls for Broader Federal Support

Toronto’s new home sales plummeted to “extremely” low levels in April, signalling a deepening crisis in the Greater Toronto Area (GTA) housing market. Data from the Building Industry and Land Development Association (BILD) reveals that the current downturn has not only reached but surpassed the severity of the 1990 recession. Amidst this challenging environment, Toronto’s leading builders and industry experts are cautioning that the federal government’s recently proposed Goods and Services Tax / Harmonized Sales Tax (GST/HST) relief for first-time buyers is insufficient to meaningfully revive the struggling market.

The latest figures paint a stark picture: only 310 new homes were sold in April across the GTA. This represents a staggering 72 percent decrease compared to the same period last year and an alarming 89 percent drop below the 10-year average for April. Typically, a bustling April would see around 2,750 new home sales, highlighting the significant disconnect between current market activity and historical norms. The breakdown of April’s sales shows 105 condominium units and 205 single-family homes, indicating a broad-based decline across housing types.

Edward Jegg, research manager at Altus Group – BILD’s data analytics partner – encapsulated the sentiment of prospective buyers, stating, “Buyers crave predictability and the swirling uncertainty around the impact of possible tariffs is depriving would-be purchasers of the confidence they need to move ahead.” This uncertainty, combined with high interest rates, inflationary pressures, and a complex regulatory landscape, creates a hesitant environment where potential homeowners are opting to wait on the sidelines, further exacerbating the market’s woes.

The Alarming Decline in New Home Sales: A Deeper Dive

The Building Industry and Land Development Association (BILD), representing over 1,000 member companies across building, land development, and renovations in the GTA, issued a grave warning this week: new home sales have reached unprecedented lows, overshadowing even the severe market contraction experienced in the 1990s. This historical comparison underscores the gravity of the current situation, where persistent challenges are stifling buyer activity and discouraging new construction.

The specific numbers from Altus Group are particularly telling. An 89 percent deficit against the decade-long average of 2,750 units for April is not merely a slump; it indicates a near-complete freeze in the market. Such a drastic reduction in sales has far-reaching implications, not only for builders and developers but for the broader economy of the Greater Toronto Area. Fewer sales mean fewer new projects commencing, which directly impacts job creation in construction, manufacturing, and related sectors. It also means a dwindling supply pipeline, setting the stage for even more severe affordability challenges in the future once demand eventually returns.

The split between condo and single-family home sales—105 condos versus 205 single-family units—suggests that even the more “affordable” entry points into the new home market are struggling. Historically, condos have often served as a more accessible option for first-time buyers or those with more constrained budgets. The significant drop across both segments points to a widespread lack of confidence among all buyer profiles, not just those eyeing larger, more expensive properties. This widespread hesitancy is a critical concern for an industry that relies on continuous new supply to meet the demands of a growing population.

The “swirling uncertainty” mentioned by Altus Group’s Edward Jegg is a multifaceted issue. It includes the unpredictable trajectory of interest rates, which directly impacts borrowing costs and mortgage affordability. Economic forecasts, whispers of potential global trade tariffs, and the general inflationary environment all contribute to an atmosphere where major financial commitments like purchasing a new home are postponed. For a market that thrives on forward momentum and long-term planning, this climate of unpredictability is profoundly detrimental.

Federal Measures Fall Short, Industry Demands Broader Scope

In response to the escalating housing crisis, the federal government recently unveiled proposed measures to offer GST/HST relief to first-time new home buyers. This initiative, while seemingly aimed at easing the burden for newcomers to the market, has been met with significant skepticism and outright criticism from industry leaders. Justin Sherwood, a spokesperson for BILD, articulated the industry’s disappointment, stating, “Unfortunately, this limitation to first-time buyers only will have a very small impact, as very few new home buyers are first-time buyers.”

Sherwood further elaborated on the perceived inadequacy of the policy: “It will not substantially help address affordability, nor will it help significantly stimulate sales and construction.” The core argument from BILD and its members is that the GTA’s new home market dynamics are complex. Many new home purchasers are not first-time buyers but rather existing homeowners looking to upgrade, downsize, or move closer to amenities. Furthermore, investors play a crucial role in providing rental stock, and their activity is also essential for a healthy market. By narrowly targeting only first-time buyers, the government’s relief package overlooks a significant portion of the buying public whose participation is vital for overall market activity and construction starts.

The industry’s unequivocal recommendation is for the government to broaden the scope of the GST/HST measures to encompass all new home purchases. This expansion, they argue, would create a much wider stimulus, revitalizing demand across all segments of the market. Such a move would not only assist a larger pool of buyers but also provide the necessary incentive for builders to initiate and complete new projects. Without broad-based support, the existing inventory will continue to sit unsold, and the pipeline for future housing supply will diminish, inevitably leading to even higher prices and a more acute housing shortage in the coming years.

The details of the government’s proposed GST/HST policy specify an elimination of the tax for first-time home buyers on new homes priced up to $1 million. For new homes valued between $1 million and $1.5 million, the GST/HST would be reduced. The maximum potential saving for eligible first-time buyers under this rebate program is projected to be up to $50,000. While a $50,000 saving is significant for an individual buyer, the industry contends that in the context of GTA’s high property values—where a million-dollar new home is increasingly common—this rebate does little to address the fundamental issues of affordability or to significantly move the needle on overall sales volumes.

An Open Call for Comprehensive Reform: Industry Leaders Unite

Coinciding with the announcement of the federal rebate measures, a coalition of prominent industry leaders penned an open letter to Prime Minister Justin Trudeau, urging for more comprehensive reforms to tackle the pervasive market uncertainty. The letter, a powerful testament to the industry’s collective concern, articulated several critical demands aimed at fostering a more robust and predictable housing environment in Canada.

Among the key requests outlined in the letter, a paramount concern was the need for “adequate rebate thresholds” to effectively address the unique challenges of the country’s most expensive regions, particularly the GTA. The industry argues that the current $1 million and $1.5 million thresholds for GST/HST relief, while a start, may still be too low given the soaring construction costs and land values in major urban centres. For many new homes in Toronto, these thresholds may not offer enough substantial relief to make a tangible difference in purchasing decisions, especially for larger family homes or properties in highly desirable areas.

Another central plea from the industry was the extension of the GST/HST exemption to all new home purchasers, not exclusively first-time buyers. This reflects the deeply held belief that stimulating the entire market, rather than just a niche segment, is crucial for fostering supply and improving affordability for everyone in the long run. By broadening the scope, the government could encourage more active participation across all buyer categories, leading to increased sales velocity and, critically, more new housing starts.

The open letter also called for “greater reform to address market uncertainty.” This encompasses a broader spectrum of issues beyond direct tax relief, including the need for stable and predictable monetary policy, streamlined municipal approval processes, reduction of development charges, and a cohesive national housing strategy that integrates supply-side solutions. The industry believes that only a multi-pronged approach addressing both demand-side incentives and supply-side constraints can effectively stabilize the market and ensure long-term affordability and availability of housing.

The diverse group of signatories to this critical letter underscores the widespread consensus within the housing sector regarding the need for more impactful government intervention. The letter was signed by leaders from: BILD (Building Industry and Land Development Association), Canmore Community Housing, the Canadian Home Builders’ Association (CHBA), Habitat For Humanity Canada, the Missing Middle Initiative, Options for Homes, Polygon Homes Ltd., and Wesgroup Properties. This coalition represents a broad cross-section of the housing ecosystem, from large-scale developers to non-profit organizations dedicated to affordable housing, indicating a unified voice in urging the federal government to re-evaluate its strategy and implement more far-reaching policies.

The Path Forward: A Call for Holistic Solutions

The dire state of Toronto’s new home market, evidenced by April’s historically low sales figures, serves as a critical warning. The industry’s concerns regarding the federal government’s limited GST/HST relief highlight a fundamental disconnect between policy intent and market reality. While aiming to assist first-time buyers, the current measures are widely seen as insufficient to address the systemic issues plaguing the GTA’s housing sector, including persistent affordability challenges and a chronic lack of housing supply.

To truly navigate this crisis, a more holistic and collaborative approach is imperative. This necessitates a partnership between all levels of government—federal, provincial, and municipal—and the private sector. Policies must extend beyond narrow demand-side incentives to robust supply-side strategies that tackle the root causes of high housing costs, such as lengthy approval processes, restrictive zoning, and escalating development charges. Expanding the GST/HST relief to all new home purchasers, as advocated by BILD and other industry leaders, could provide a much-needed broad stimulus, encouraging sales and subsequently, new construction starts across the entire market.

Revitalizing the GTA’s housing market is not just about real estate; it’s about economic stability, job creation, and ensuring that Canada’s largest metropolitan area remains a place where people can afford to live and thrive. Without immediate and comprehensive action, the current downturn risks exacerbating the existing housing crisis, leading to further price escalation and diminishing accessibility for future generations. The time for decisive, collaborative, and far-reaching policy reform is now, to build confidence and foster a sustainable future for housing in the Greater Toronto Area.