Toronto's May 2024 Housing Stats and the First Rate Cut

As of May 2024, Toronto's spring market was unusually quiet: home sales were 21% below May 2023, the slowest May in 24 years, while more than 18,000 new listings came to market, up 21%. The average price was about $1,165,000, 2.5% lower than a year earlier.

I am Moe Asgarian, a Broker in Toronto with RE/MAX, ranked #47 in the company worldwide, and through that May I told clients the same thing: the market was not weak, it was waiting. The Bank of Canada finally lowered its rate in early June 2024, and these are the numbers that decision inherited.

What TRREB reported for Toronto in May 2024

The Toronto Regional Real Estate Board, or TRREB, reported that sales in Toronto in May 2024 were 21% below May 2023. The last time a May was that quiet in Toronto was 24 years earlier, in May 2000. That is the line most of the coverage stopped at.

The supply side moved the other way. More than 18,000 new homes entered the MLS system in May 2024, about 21% more than the same time the year before. The average price in Toronto that month was around $1,165,000, which was 2.5% below May 2023. A month full of listings with few active buyers is exactly what those three numbers describe.

The GTA picture in May 2024

Across the Greater Toronto Area the story was much the same in May 2024. The benchmark price of a home came down about 1%, and prices were roughly 3.5% lower than in May 2023. Nothing dramatic, just a market drifting while it waited for one decision.

I want to be clear about what those declines were and were not. About one percent off a benchmark is not a crash, and a dip of roughly 3.5% year over year in the GTA in May 2024 did not change what a buyer could qualify for. The binding constraint that month was the cost of borrowing, not the price.

Why buyers waited in May 2024

Interest rates were still high in May 2024, and at the same time much of the media was saying the Bank of Canada was about to lower them. Buyers heard that both fixed mortgage rates and variable rates were likely to come down. So almost everyone held off that month.

As it turned out, a lot of them predicted correctly. Rates came down in early June 2024 and the chance of getting a better mortgage improved. Waiting one month was a reasonable call for many households, which is also why May's weakness says less about real demand than the sales figure suggests.

What a 25 basis point cut does to a monthly payment

Let me put the June 2024 reduction in plain terms. If you bought a $650,000 apartment in Toronto, that cut in interest took roughly $150 a month off your payment. It is a noticeable amount. It is not enough to change the way a family lives.

So why did it matter? Because it makes people hopeful about where the housing market is going. The cut was only 25 basis points, but it feeds into mortgage rates on both the variable and the fixed side, and in mid-2024 that was the engine most likely to warm the market up over the summer.

What to expect after May 2024

Looking forward from June 2024, inflation had come down and the market had something it had been missing: psychological optimism. The expectation was that construction costs would ease and that buying a home would be a better deal than it had been in May.

My own read at the time was that freehold buyers and sellers would both get a window. Sellers sitting in that large pile of May listings would meet buyers who had been waiting for a signal, and the first cut was the signal. Whether the window stayed open depended on what the Bank of Canada did next, not on anything in the May numbers.

If you are weighing a purchase or a sale in Toronto and want to know what a rate change actually does to your own numbers, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.