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September’s housing data for the Greater Toronto Area released by the Toronto Regional Real Estate Board (TRREB) carried headlines that seemed to suggest improvement.

Sales were up 8.5 per cent compared with a year earlier, and the Bank of Canada’s September rate cut provided a modest lift to affordability. More households stepped back into the market as mortgage payments inched closer to reach, creating the impression that momentum is returning. Yet the deeper reading is less reassuring. Prices remain in retreat, listings continue to accumulate, and the time it takes to sell a property has stretched noticeably. The result is a market that looks busier but remains structurally imbalanced, as I pointed out in my op-ed for August’s numbers.

TRREB reported an average sale price of $1.06 million in September, down 4.7 per cent year-over-year. The MLS Home Price Index fell by 5.5 per cent, confirming that valuations are slipping. Month-to-month, prices appear stable, but the broader trend is downward pressure as supply outpaces the ability of buyers to absorb it.

 

Supply outpaces demand

 

The year-over-year summary reveals how fragile this apparent recovery is. Active listings climbed by nearly 19 per cent compared with September 2024, while sales increased by less than half that pace. New listings edged up only 3.9 per cent, meaning more homes are stagnating on the market and have driven the total inventory to 29,394. As Valery agent Robert Marsiglio illustrated in a chart shared on X (given below), September 2025 ranked as the second busiest September for new listings across the GTA in the past decade. Homes are also taking longer to sell, with the average listing period increasing from 27 to 33 days and property days on market stretching from 42 to 51.

 

 

Earlier today, I tweeted that no serious discussion of a bottom can take place while supply continues to rise faster than demand. Until that imbalance shifts, prices are unlikely to stabilize with any permanence.

 

 

Uneven geographies

 

The breakdown by home type illustrates just how uneven the correction has become. Detached sales rose 9.6 per cent year-over-year, yet average prices fell 5.1 per cent. Semi-detached homes saw an 11 per cent increase in sales, with prices down 6.8 per cent. Condominiums recorded a 7.2 per cent gain in sales while prices slipped 4.3 per cent.

One segment stands apart. Townhouse sales in the 416 soared nearly 40 per cent compared with last year, the strongest growth of any category. Prices still declined by almost five per cent, but the sharp rise in transactions signals a clear buyer preference for ground-oriented homes that remain relatively more affordable than detached properties while offering more space and utility than a condominium.

The divergence between the 416 and 905 regions further underscores the imbalance. Detached home prices in the city declined by less than one per cent, while suburban detached properties fell by 7.2 per cent. Central locations show relative resilience, while suburban markets face a steeper adjustment. The leap in townhouse demand within Toronto proper points to an enduring appetite for “missing middle” housing, even as other segments struggle to find stability.

 

 

Policy, economics and the fragility of confidence

 

All of this is unfolding against a difficult economic backdrop. GDP contracted by 1.6 per cent in the second quarter, and unemployment in Toronto has climbed to nine per cent. Inflation has cooled to 1.7 per cent, which gives the Bank of Canada space to continue easing, but households remain wary. Even with slightly lower borrowing costs, buyers are pressing harder in negotiations, fully aware that inventory levels tilt the leverage in their favour.

TRREB is right that lower rates stimulate spending and provide some cushioning for the broader economy. Yet reliance on monetary easing to prop up sales activity is a poor substitute for structural balance. A housing market that functions only when rates are falling reflects deeper problems of affordability and income stagnation.

 

What comes next

 

The path forward will hinge on whether demand can sustainably absorb the surge of listings. Additional rate cuts may add momentum, but they cannot alone correct the oversupply or rebuild seller confidence. Policymakers and builders will need to confront the alignment of new supply with true affordability rather than perpetuating cycles of overhang and retrenchment.

For buyers, this remains a rare period of leverage. Choice is abundant, timelines are extended, and sellers are adjusting expectations downward. September’s data reinforce a clear point. Toronto’s housing market has not yet found its bottom, and until supply and demand converge, recovery will remain more appearance than reality.