Toronto home sales declined year-over-year in October, but prices remained elevated, exacerbating concerns over affordability in Canada’s largest city.

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Toronto home prices rise for second straight month on flat sales in October Back to video

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A monthly report released by the Toronto Regional Real Estate Board (TRREB) on Nov. 2 showed the average price of a home sold was up for the second straight month, rising roughly 0.6 per cent month-over-month to $1,125,928 in October. That was also about 3.5 per cent higher than in the same month a year ago.

“Competition between buyers remained strong enough to keep the average selling price above last year’s level in October and above the cyclical lows experienced in the first quarter of this year,” TRREB chief market analyst Jason Mercer said in the report.

Home sales however, were more or less flat from September and down 5.8 per cent when compared to October 2022. The decline in year-over-year sales was particularly noticeable in the townhouse segment, which fell 11.5 per cent year over year.

New listings, meanwhile surged compared to the same period last October, up 38 per cent, though it was down on a month-over-month basis from September.

As a result the sales-to-new-listings ratio ticked back up to 32.3 from the 28.6 ratio recorded in the previous month. According to the Canadian Real Estate Association’s standards, this shift places the market firmly within the “buyer’s market” territory.

Despite the flood of new inventory and sluggish sales, housing prices have remained strong, something that combined with elevated interest rates is adding affordability challenges.

“If interest rates hold at their current level, it would only take a home price increase of two per cent in the fourth quarter to surpass the worst level of affordability in a generation,” National Bank said in its latest Housing Affordability Monitor, released Nov. 1

Cameron Forbes, chief operating officer at Remax Realtron Realty Inc. in Thornhill, Ont., said that the evolving market conditions have created a noticeable gap in expectations between buyers and sellers, exerting pressure on property prices.

“I’ll sell my home but I’m going to sell it for what I think the value is and of course that value is not worth that anymore,” he said, referencing the reluctance of sellers to reduce their prices “Buyers know that so buyers will not buy that home.”

Forbes added that sellers who are not obligated to sell and have overpriced their can play the waiting game, but that ultimately, some people need a place to live, and will be forced to pay up, adding to the support to price levels.

• Email: shcampbell@postmedia.com