The head of the Toronto region homebuilders’ association is warning the re-elected provincial government must keep its commitment to increasing housing supply, even though sales of new construction homes continued to slump in May.
Home prices, however, rose across the board, particularly single-family houses, which climbed 31 per cent year-over-year to a benchmark $1.84 million last month, according to the Building Industry and Land Development Association (BILD).
That pushed the cost of a newly built and pre-construction detached, semi-detached or townhome past April and March’s benchmark and closer to this year’s February peak of $1.86 million.
“Although you are seeing a short-term softening in sales, there is still a recognition that we have an overall supply challenge that is continuing to support the pricing points that have been achieved over the last 12 months,” said BILD CEO David Wilkes, who compared the current housing market to the 2017 correction in which sales slowed briefly before roaring back to life.
“The numbers are telling me this is a pause and, because of the high maintenance of the price points, we need to continue to aggressively address supply,” he said.
Single-family home sales plummeted 62 per cent year-over-year, bringing them 58 per cent below the 10-year average.
The price of new-build condos also rose 10.5 per cent annually in May to a $1.18 million benchmark as sales of those units tumbled 31 per cent year-over-year — 10 per cent below the 10-year average.
Of the 2,058 new construction homes sold last month, only 491 were single-family dwellings.
But new home inventory — the number of units available for sale — rose to 10,004, up from 9,327 in April and 7,220 in March. Of May’s inventory, 8,050 units were condos and 1,954 were single-family lots.
But that still leaves supply at well below what BILD considers a healthy market, said Wilkes.
“In 2013 and 2014, we had above 30,000 units in inventory. Ten thousand units is about four months’ supply. We need nine to 12 months in a healthy market to have the appropriate supply to have a balanced market,” said Wilkes.
He said he hopes the re-elected Progressive Conservative government continues in its commitment to boost Ontario’s housing supply as recommended by its own Housing Affordability Task Force in February. The task force said Ontario needs to build 1.5 million houses in the next decade. That would mean building at almost twice the current rate.
Wilkes, a member of the task force, said the government has “an overwhelming mandate from the electorate to do so.
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