Greater Toronto Area (GTA) home prices fell in June, the first drop in five months, as the Bank of Canada's move to restart its interest rate hiking campaign injected a measure of uncertainty into the market.
The average price of a GTA home fell 1.2% in June from May to C$1,182,120 ($890,084), while the number of sales declined 16.9%, Toronto Regional Real Estate Board (TRREB) data showed on Thursday.
"The demand for ownership housing is stronger than last year, despite higher borrowing costs. With this said, home sales were hampered last month by uncertainty surrounding the Bank of Canada's (BoC) outlook on inflation and interest rates," TRREB President Paul Baron said in a statement.
The BoC last month raised its benchmark interest rate by 25 basis points to a 22-year high of 4.75%, its first move since January, aiming to slow the economy sufficiently to cool inflation.
Money markets expect the central bank to tighten further, perhaps as soon as at a policy decision next Wednesday.
On a year-over-year basis, the number of home sales rose 16.5% in June and the average home price was up 3.2%. Still, the average home price was down 11.4% from the February 2022 peak.
"A persistent lack of inventory likely sidelined some willing buyers because they couldn't find a home meeting their needs," Baron said. "Simply put, you can't buy what is not available."
New listings fell 3% in June from the same month last year, contributing to a tightening in market conditions. ($1 = 1.3281 Canadian dollars) (Reporting by Fergal Smith; Editing by Jamie Freed)