New home sales in the Greater Toronto Area were down by 26 per cent in June compared with the same time last year, according to a report Wednesday by the Building, Industry and Land Development Association.
Reflecting the slowdown already evident in the resale market, this is the first month that new home sales have shown a decline compared with last year when the financial crisis had tanked real estate sales.
According to BILD, 2,920 homes sold in June compared with 3,925 in June of 2009.
Much of the decrease was attributed to low-rise sales, down by 46 per cent from last year. High rise sales remained steady.
“With relatively few new project openings thus far this year, low rise sales have been naturally constrained,” said the organization.
A record low inventory of low rise homes has slowed sales. Builders are also facing difficulty acquiring developable sites in the GTA, according to group.
Another issue is affordability. Low rise homes are more expensive than high rise developments, so first time buyers are being squeezed out of the market.
The Bank of Canada announced on Tuesday it is also increasing its key overnight rate by a quarter of a percentage point, which is putting pressure on long term mortgage rates. The bank also downgraded its outlook for growth this year and next due to greater than expected weakness in the economy.
July 21, 2010
Tony Wong
BUSINESS REPORTER
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