A new report reveals that the HST rebate helped boost new home sales in the Greater Toronto Area (GTA) last month, but the condo sector continues to struggle with record-low sales.
Sales Surge Driven by Single-Family Homes
According to the Building Industry and Land Development Association (BILD), new home sales in the GTA reached 2,500 units in May, a significant increase from the previous month. The surge was primarily driven by single-family homes, which saw a 40% jump in sales compared to April.
However, the condo sector remained weak, with only 800 units sold, the lowest May figure on record. BILD noted that the HST rebate, which was increased in the recent provincial budget, helped spur demand for single-family homes but did little to revive the condo market.
Condo Inventory at Historic Highs
The report highlights that the condo market is facing a glut of unsold units, with inventory levels reaching historic highs. There are currently over 20,000 new condos available for sale in the GTA, representing a 15-month supply. In contrast, the supply of single-family homes is much tighter, with only 3,000 units available.
“The HST rebate has provided a much-needed boost to the single-family home market, but the condo sector continues to face significant headwinds,” said Justin Sherwood, BILD’s senior vice president of communications. “Buyers are still cautious about investing in pre-construction condos due to high interest rates and economic uncertainty.”
Economic Factors Weigh on Condo Demand
Industry analysts attribute the condo market’s struggles to several factors, including rising interest rates, stricter mortgage rules, and a slowdown in immigration. The Bank of Canada’s key interest rate remains at 5%, making it more expensive for buyers to qualify for mortgages. Additionally, the federal government’s new mortgage stress test has made it harder for first-time buyers to enter the market.
“The condo sector is particularly sensitive to interest rate changes because many buyers are investors who rely on financing,” said Jane Doe, a real estate economist at the University of Toronto. “With borrowing costs high, investors are pulling back, and that’s causing a slowdown in sales.”
Outlook for the Remainder of 2026
BILD expects the divergence between single-family homes and condos to persist in the coming months. The HST rebate is set to expire at the end of the year, which could provide a temporary boost to sales in the fall. However, the long-term outlook for the condo market remains uncertain.
“We are closely monitoring the situation and working with our members to find solutions to the condo market challenges,” Sherwood said. “We continue to urge the government to take further action to address housing affordability and supply issues.”
The report comes as the Toronto Regional Real Estate Board prepares to release its June sales data next week. Analysts expect overall home sales to remain below average due to ongoing affordability challenges.
