In August, the Greater Toronto housing market showed signs of strain, despite a slight uptick in buyers. Although sales saw a modest year-over-year increase, overall demand remains historically low and far from stabilizing. At the same time, a surge in new listings led to record-high inventory levels, putting downward pressure on prices. The imbalance between supply and demand has intensified, making it clear that the market is still struggling to recover.

Home prices continued their descent, with the average price of a typical home falling by over $11,000 in August alone. This marks one of the largest monthly drops in the past year and contributes to a broader downward trend. Prices have now fallen more than 24% from their early 2022 peak, showing just how far the market has retreated from the high point of the recent boom. The pace of decline is concerning for both sellers and industry observers hoping for a turnaround.

Despite a slight year-over-year rise in sales, overall activity remains very weak by historical standards. Sales in August were among the lowest in the past quarter-century for that month, surpassed only by last year’s even lower figures. The scale of the gap between current and normal levels is staggering sales would need to more than double just to match more typical pre-pandemic volumes. Without a significant shift in market conditions, a return to those levels seems unlikely.

Inventory growth has become one of the defining features of the current market. New listings continue to rise rapidly, bringing total active listings to their highest level on record for the month of August. The pace of this increase has been dramatic, pushing inventory levels to nearly triple what they were just a few years ago. This glut of supply is putting additional pressure on sellers, many of whom are struggling to compete in a saturated market.

While some may take comfort in the small rise in sales, it does little to offset the overwhelming growth in inventory. The imbalance suggests that the market is still in correction mode, especially with more supply expected as new construction projects are completed. Many of these new units were purchased by investors, some of whom may now be forced to sell due to underperforming rental yields. As this trend continues, the regional market could further drag down national housing figures, especially in areas that haven’t yet felt the full weight of the correction.