GTA Housing Market Cools as Sales Dip, Construction Slows – But Affordability Beckons

Toronto, ON – November 15, 2025 – The Greater Toronto Area housing market is undergoing a noticeable shift, with October data revealing a dip in sales, a slowdown in construction, and the first real signs of improving affordability in years. While economic uncertainty continues to cast a shadow, a confluence of factors is creating a more balanced – though complex – landscape for both buyers and sellers.

According to the latest report from the Toronto Regional Real Estate Board (TRREB), GTA home sales fell 9.5% year-over-year in October, with the average selling price down 7.2% to $1,054,372. This marks a significant departure from the frenzied activity seen throughout much of the past three years. New listings, however, rose by 2.7%, suggesting a growing inventory of homes available.

“We’re seeing a clear cooling effect after a prolonged period of price appreciation,” explains one industry analyst. “Rising interest rates, combined with broader economic concerns, are prompting some buyers to remain on the sidelines. This is giving others more breathing room – and choice – in the market.”

Construction Sector Faces Headwinds

The slowdown isn’t limited to resale activity. The construction sector is also feeling the pinch. Housing starts fell 5.2% in October, and building completions dropped 4.4%, according to Canada Mortgage and Housing Corporation (CMHC) data. Nearly 42% of developers report delaying projects due to market uncertainty, and 31% of planned 2025-2026 projects are now on hold.

“Financing is becoming increasingly difficult to secure, and construction costs remain high,” says a developer who wished to remain anonymous. “We’re having to carefully reassess projects and prioritize those with the strongest financial viability.”

Several high-profile developments have been put on hold or scaled back, including phases of the Evolve On King West project and delays in the overall completion of the Well mixed-use development. While construction continues on the Ontario Place redevelopment, the pace has slowed.

Affordability – A Glimmer of Hope?

Despite the economic headwinds, the data suggests that affordability is slowly improving. Lower prices, combined with a slight dip in mortgage rates (currently averaging 5.45% for a 5-year fixed rate), are making homeownership more accessible to some.

“We're starting to see a shift in the type of buyer entering the market,” notes a real estate agent specializing in first-time homebuyers. “More first-time buyers now represent 42% of October sales (up from 38% in 2024), and this demographic is showing more willingness to enter the market at these prices.”

However, affordability remains a significant challenge for many. Rent prices continue to climb, up 3.8% year-over-year, and a substantial portion of first-time buyers – around 28% – are still relying on financial support from family or inherited wealth to secure a down payment.

Shifting Demographics and Investment Trends

The changing market dynamics are also impacting investment trends. Sales of investment properties are down 15% year-over-year, with average cap rates increasing from 2.8% to 3.2%. Many landlords are reporting difficulty finding tenants, signaling a potential shift in the rental landscape.

“We’re seeing more investors reassess their portfolios and look for opportunities in other asset classes,” says one financial advisor. “The risk-reward ratio in the GTA housing market has shifted, and many are seeking more stable returns.”

Policy Responses and Future Outlook

Governments at all levels are responding to the changing market conditions. The Ontario government recently announced a review of the development approvals process, aiming to streamline the process and reduce delays. The Toronto City Council is considering new incentives for affordable housing, while the federal government has extended the First-Time Home Buyer Incentive program.

Looking ahead, the GTA housing market is expected to remain in a period of transition. Experts predict that prices will likely stabilize or experience moderate declines in the short term. The pace of recovery will depend on a number of factors, including interest rate movements, economic growth, and government policy.

“We’re entering a new phase of the market cycle,” explains one housing economist. “The days of rapid price appreciation are likely over, but the GTA remains a desirable place to live and invest. A balanced approach – focusing on sustainable growth and affordability – will be key to ensuring a healthy housing market in the years to come.”

Key Takeaways:

• GTA home sales and prices declined in October, signaling a market cooldown.
• Construction activity is slowing down due to economic headwinds.
• Affordability is slowly improving, but remains a significant challenge.
• Investment trends are shifting, with more investors reassessing their portfolios.
• Government policy and economic factors will shape the future of the GTA housing market.