The seasonally adjusted benchmark price of a home in Canada’s largest city dropped 0.4% in May to C$1.08 million ($789,800) from a month earlier, according to a report released Wednesday from the Toronto Regional Real Estate Board. It was the first decline since January. The number of sales fell for a fourth straight month even as new listings rose.
The dip in Toronto home costs comes amid easing in other consumer price pressures. Inflation appears to be heading toward the central bank’s 2% target, prompting speculation the Bank of Canada may begin cutting interest rates as early as its meeting on Wednesday.
“We have seen selling prices adjust to mitigate the impact of higher mortgage rates,” Jason Mercer, the Toronto real estate board’s chief market analyst, said in a statement. “Affordability is expected to improve further as borrowing costs trend lower.”
For now, buyers are struggling to strike deals as rates remain high, even as more owners have been prompted to list their homes. Sales in Toronto fell 1.8% on a seasonally adjusted basis in May to 5,167 transactions from a month earlier, while the number of new listings rose 2.6% to more than 13,000, according to the real estate board’s report.
The sales slowdown has left more homes on the market. Nearly 22,000 properties are currently for sale, up 83% from the same period last year, the data show. That’s weighed on prices, with the benchmark cost of a home down 3.5% from where it was last May.
Traders are pricing in a 76% chance the Bank of Canada cuts its benchmark interest rate when it concludes its policy meeting Wednesday, according to Bloomberg calculations.