Condo sales in the Greater Toronto and Hamilton Area were up year-over-year last quarter for the first time since 2023 and a new report is warning that supply is now “thinning quickly” due to a lack of new construction.
The latest report from Urbanation notes that 702 condos were sold in the second quarter of this year.
That represents a 52 per cent increase from the second quarter of 2025, reflecting the first year-over-year gain since 2023.
The real estate firm credits the elimination of the HST on new homes and bulk investor buying as the factors pulling the market back up from its 35-year lows.
Even still, the report notes that sales were still 86 per cent below the latest 10-year average for the quarter due to ongoing uncertainty in the market and the delayed rollout of the HST rebate.
Both the provincial and federal governments announced in March they would temporarily expand the HST rebate for new homes in Ontario for one year, allowing all buyers a rebate of up to $130,000.
Almost all of the sales that were seen in the condo market in this quarter was in new, completed projects, with Urbanation saying sales more than tripled from a year ago to 535 units sold.
Pre-construction sales, however, moved in the opposite direction. The report says the number of sales for these particular units dropped 80 per cent, with only 50 units sold.
“This reflected, at least in part, how the HST rebate is structured as it requires construction to start before March 31, 2027, and be substantially completed by December 31, 2029, creating a real risk that pre-construction buyers won’t qualify,” the report reads.
While developers wait for the HST rebate rules to fully roll out, Urbanation says asking prices for completed, unsold new condos dropped by two per cent, to an average of $1,186 per square foot in the second quarter. This reflected a record 43 per cent premium over average resale prices in new projects in the last three years, with the average hovering at $830 per square foot.
That said, new condos that sold in this time typically went well below the asking price. This is because developers aggressively lowered asking prices, the report notes, and negotiated selling prices following the HST announcement.
The inventory across the GTHA, for both new and resale condos, sat at 12,106 units by the end of the second quarter. Urbanation says this is only up by one per cent from 2025, reflecting the “slowest pace of growth in three years.”
Developer-held inventory rose to a record high in the second quarter to just more than 5,000 units, which the report says is 68 per cent higher than what was seen in 2025. However, there was a 21 per cent drop in active resale listings, which sat at a three-year low of 7,105 units.
“After more than four years of decline, it’s an important signal to see new condo sales respond to the elimination of HST and investor activity,” Urbanation President Shaun Hildebrand said in the release.
“That said, this improvement is coming off an extremely low base, and pre-construction demand remains largely dormant. With virtually no new units being added to the pipeline, condo supply is set to see its largest ever decline in the coming years.”
Urbanation expressed concern over the outlook for future condo supply, as it is continuing to shrink. Pre-construction and under-construction units fell by 37 per cent year-over-year, the report notes, adding that it reflects a 62 per cent dive from the glut of inventory in 2022, when there was about 127,000 units.
There are no new project launches in the pipeline for the second consecutive quarter, Urbanation says, adding that there were more than 1,000 cancelled units and 448 units that started construction. The real estate firm says this inventory is “thinning quickly,” which could reflect a “substantially undersupplied” market within a few years.
