Toronto home sales edge higher as buyers find softer prices despite costlier loans

What happened in the market

Toronto home sales grew 1.2% for October on a seasonally adjusted basis, marking the first monthly increase since July, according to the Toronto Regional Real Estate Board. Sellers also returned, with new listings up 3.8% in the month.

Prices were steadier. The board's benchmark price in October ticked up 0.1% to C$928,800, equal to about US$663,000. Even so, buyers stepped in as they saw a broader downtrend in prices, helping activity perk up despite pricier borrowing.

Why borrowing costs matter now

Canada's central bank raised its key overnight rate by 0.25 percentage point to 2.5% last Wednesday, the first move higher in more than three years. Rate changes punch above their weight in Canadian housing because variable-rate loans are widely used.

Toronto's market is also feeling mounting strain from climbing government bond yields, higher interest rates, and more uncertainty tied to the US-Canada trade war. After the decision, Senior Deputy Governor Carolyn Rogers said financing costs are dragging on housing, "particularly in Toronto and Vancouver," adding, "Our outlook on housing is pretty subdued." Bloomberg data show yields on the Government of Canada five-year bond, the reference for a popular fixed-term mortgage, have risen by more than 0.5 percentage point since late June.

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The affordability picture

Jason Mercer, who serves as the board's chief information officer, put it this way: "While borrowing costs have increased on the back of higher inflation, the impact on monthly mortgage payments has been mitigated by lower selling prices, helping keep affordability in check."

The bottom line: sales, listings, prices, and rates are all shifting at once. For your portfolio, that mix points to a market where headline price stability can coexist with tighter financing and bond yield pressure, which tends to filter through to housing-related stocks, lenders, and REITs tied to Canadian property.

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