Toronto Home Sales Tank in April Amid Trade Uncertainty, Waiting for Lower Mortgage Costs

The Toronto real estate market entered a period of significant correction in April 2025, with sales volumes plummeting and prices under pressure as buyers awaited further reductions in mortgage rates. The decline coincided with heightened economic uncertainty stemming from U.S. trade tensions and a federal election, casting a shadow over what was once Canada’s most robust housing market. This article explores the key drivers behind the downturn and assesses the outlook for recovery.

Sales Collapse and Pricing Adjustments

Toronto’s residential sales fell by 23.3% year-over-year (YoY) in April 2025, with just 5,601 homes sold—a 14-year low excluding the pandemic slump of 2020. The average selling price dipped 4.1% YoY to $1.107 million, driven by declines across all property types except semi-detached homes. Condos bore the brunt, with sales dropping 30.4% and prices falling 6.1% compared to April 2024. Meanwhile, detached homes—the market’s largest segment—experienced a 6.8% YoY price decline, signaling broad-based weakness.

Inventory Surge and Buyer Dominance

The market has shifted decisively into buyer territory, with active listings rising 8.1% YoY to 18,836. This pushed the sales-to-new-listings ratio to 30%—well below the 40% threshold signaling buyer leverage—and created 4.1 months of inventory, up from 2.7 months in April 2024. Buyers now have substantial negotiating power, particularly in condos, where inventory climbed to 6.8 months of supply, forcing sellers to price aggressively. Properties now take 33 days on average to sell, a 5-day increase YoY, with condos languishing on the market for 44 days.

Interest Rate Dynamics: The Lingering Wait

The Bank of Canada (BoC) has been pivotal to the market’s trajectory. After slashing rates by 225 basis points since mid-2024, the BoC paused in April 2025 at 2.75%, citing uncertainty over U.S. trade policies. Markets now anticipate two additional cuts by year-end, potentially bringing the rate to 2.25%. Analysts project this could lower five-year fixed mortgage rates to around 4.5%, easing affordability pressures. However, the BoC’s caution underscores risks: if trade tensions escalate, Canada could face a 1.0% GDP contraction in 2025, worsening housing demand.

Regional Disparities and Strategic Opportunities

While the GTA’s core markets like Toronto Central saw sales drop 29.8% YoY, suburban areas like Mississauga faced even sharper declines. However, Halton Hills and Milton demonstrated relative resilience, with sales pacing faster despite rising inventory. For investors, detached homes in the city (416 area) remain more stable, with 36-43% sales-to-listings ratios indicating a balanced market. Condos, however, present risks: TD Bank predicts prices could drop 10% in 2025, erasing gains from earlier in the decade.

Outlook: When Will Buyers Return?

TRREB projects a modest 2.6% price increase by year-end, assuming further rate cuts and clarity on trade policies. Yet, with the BoC warning of a 40% recession risk, pessimism persists. Buyers are holding back until borrowing costs stabilize and economic conditions improve, while sellers face a stark choice: price competitively or wait in a worsening inventory environment.

Conclusion: A Market in Transition

Toronto’s housing market in April 2025 reflects a critical inflection point. With sales at a 14-year low, prices under pressure, and inventory at elevated levels, the path to recovery hinges on three factors:
1. Interest Rate Cuts: A drop to 2.25% by year-end could reignite buyer demand, particularly among first-time buyers.
2. Trade Resolution: A U.S.-Canada trade deal would boost consumer confidence and economic growth.
3. Inventory Management: Sellers must adapt to buyer leverage, pricing below recent sales to avoid prolonged listings.

While condos and suburban markets face steep challenges, detached homes in core areas offer relative stability. Investors should prioritize cash-flow-positive properties and wait for clearer signals on macroeconomic conditions before committing to purchases. For now, Toronto’s real estate story is one of patience—and the hope that lower rates and political clarity will tip the scales toward recovery.