Higher borrowing costs brought more balance to the Greater Toronto Area housing market in May, with home sales down on a monthly and annual basis and active listings up.

The Toronto Regional Real Estate Board (TRREB) also found more negotiating power among buyers, which is causing selling prices to trend lower since April.

But behind the curtain of these cooler conditions is the pervasive issue of demand.
As TRREB CEO John DiMichele said in a statement, “the shorter term impact of higher interest rates will not be with us forever. Supply remains the long-term challenge.”

The average price also remains untouchable, now sitting at $1,212,806—an annual growth rate of 9.4 per cent.

“Bank of Canada rate hikes, including the 50-basis point hike on June 1, are impacting home buyers in the short term,” added TRREB President Kevin Crigger. “There is now a psychological aspect where potential buyers are waiting for a bottom in price. This will likely continue through the summer. However, as home buyers adjust to higher borrowing costs, housing demand will be supported by extremely low unemployment, high job vacancies, rising incomes and record immigration.”

Realtors reported 7,283 sales in May, down 38.8 per cent compared to last May and down nine per cent from last month. Active listings were up by 26 per cent year-over-year.

“After a strong start to the year, the current rate tightening cycle has changed market dynamics, with many potential home buyers putting their purchase on hold,” said TRREB Chief Market Analyst Jason Mercer. “This has led to more balance in the market, providing buyers with more negotiating power.”