The Greater Toronto Area (GTA) housing market continued to adjust in August 2025, with average prices extending their downward trend for the third consecutive month. While values have retreated to their lowest level since early 2021, the correction has coincided with a modest resurgence in buyer activity. Sales recorded another year-over-year increase, signalling that improved affordability is beginning to draw more households back into the market.
Inventory Pulls Back, Competition May Rise
Active listings declined in August, marking the second straight monthly pullback. From a June peak of more than 31,000 active listings, inventory has dropped to 27,495, a 13 per cent decline. Although supply levels remain high by historical standards—80 per cent above the ten-year August average—the recent tightening suggests negotiating power could gradually shift back toward sellers if demand continues to improve.
Sales activity strengthened, with 5,211 transactions in August, marking the third consecutive month of year-over-year gains. Buyers are also securing greater discounts from asking prices, as the sales-to-list price ratio eased to 97 per cent, down from 100 per cent in March.
Prices Retreat to Early 2021 Levels
The GTA’s average sales price now sits at $1,022,143, the lowest since February 2021. From the peak of $1,334,544 in February 2022, values are down 23 per cent. Detached homes led the declines in August, dropping 3.6 per cent in one month, or nearly $50,000, and are now down 8 per cent since May. Prices for detached properties are currently 27 per cent below their peak, a historically strong signal of long-term value.
Condominium values also continued their slide. After a steep 6.45 per cent drop in July, condos slipped another 1.4 per cent in August, bringing the average price to $642,195, the lowest in more than four years. Sales activity softened, falling 13 per cent to 1,369 transactions, even as inventory reached 9,105 active listings, up more than 9 per cent from a year earlier.
Townhomes, by contrast, stood out as the only property type to record a price increase. Values rose by 1.8 per cent to $946,395, with active listings down 12 per cent and sales up 9 per cent compared to August 2024. Semi-detached homes, however, slipped below the $1 million threshold for the first time since August 2022, with average prices at $980,102—a 10.3 per cent loss over the past two months.
A Shifting Market
The data reflects a market in transition. Price corrections are enhancing affordability, and buyers are responding with renewed activity. Detached and condo prices have rolled back to 2021 levels, creating opportunities for value-driven purchasers. Meanwhile, townhomes remain a bright spot, supported by demand from families and first-time buyers.
Broader forces are also at play. A recent Royal LePage survey found that political uncertainty in the United States is prompting more Canadians to divest U.S. properties and redirect capital into domestic real estate. As Royal LePage CEO Phil Soper noted, this shift highlights how confidence in Canada’s housing market is being reinforced by global instability, a trend that could benefit local markets in the years ahead.
Interest Rates, Affordability, and the Broader Economy
The housing market suggests that additional interest rate cuts may be needed to offset the economic impact of tariffs and slowing growth. While lower rates, combined with softer home prices, improve affordability on paper, many households continue to struggle to qualify for or manage mortgage payments, as incomes lag behind housing costs.
In the short term, additional rate cuts could stimulate spending on big-ticket items, such as housing, thereby driving a broader economic recovery. However, in the medium to long term, Canada’s ability to sustain affordability and economic resilience will rely heavily on large-scale infrastructure projects. Investments in housing supply, transit, and community amenities will be essential not only for supporting population growth but also for stabilizing homeownership costs in the years ahead.
Final Thoughts
August confirmed the continuation of price declines across most property types, but also revealed encouraging momentum in sales. Buyer confidence is slowly improving, while inventory levels have retreated from their summer highs. With interest rates stable and affordability at its strongest point in decades, the current environment presents a rare window for buyers.
For sellers, conditions remain competitive, but declining inventory and steady demand suggest that well-priced and well-marketed properties will find buyers. As the GTA housing market continues to find its footing, both buyers and sellers should stay alert—the balance of power could shift quickly in the months ahead.
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