Foch: Toronto sellers are cutting supply before prices find a floor

Toronto’s housing correction entered a more stubborn phase in July. Prices kept grinding lower, buyers remained selective, and sellers began responding by withholding inventory.

The GTA recorded 5,995 sales during the month, down 0.9 per cent from July 2025, according to the latest data from the Toronto Regional Real Estate Board (TRREB). The average selling price fell 4.5 per cent year over year to $1,003,956, while the MLS Home Price Index (HPI) benchmark declined 4.6 per cent. The annual measures tell a consistent story: prices remain under pressure.

The raw monthly average produced an even harsher number. It dropped from $1,058,928 in June to $1,003,956 in July, a decline of $54,972, or 5.2 per cent. Monthly averages move with seasonality and the mix of homes sold, so that figure should be read alongside the benchmark and seasonally adjusted data. Still, July gave sellers little evidence of a durable floor.

Freehold homes absorbed the largest hit

Source: TRREB Market Watch PDF

When it comes to price, the 416 semi-detached market saw the biggest drop in price, but the 905 detached market stood out. Its average price fell from $1,272,842 in June to $1,207,295 in July, a monthly decline of $65,547, or 5.1 per cent. Among the four major 905 housing types, detached homes posted the largest decline. Semi-detached, townhouse and condominium apartment averages each fell by less than 1.5 per cent.

I’m usually reluctant to use data from any historically slow months (July, August, December) to call a trend, especially when it’s month over month. A lot of this can be explained away with data. It could be selection bias, for example, condos haven’t been as violently repriced in July, but they typically do see stronger summer markets. Freehold homes often will see lower averages in the summer, when the buyers of the biggest houses (families) are busy doing summer stuff with the kids, because they prefer to transact in the spring to move between the school year. This is pretty typical seasonality that can be observed by looking at 50-plus years of data, though it does appear that this year has seen a bit more of a slump in price and volume heading into July:

Source: thehabistat.com via TRREB/PropTX

Source: thehabistat.com via TRREB/PropTX

The detached segment exposes the affordability ceiling most clearly. A buyer financing a home near $1.2 million still faces a large down payment, a demanding mortgage qualification test and significant monthly carrying costs. Many move-up buyers also need to sell another property before completing the purchase, and we know how that goes in today’s market. Weakness in one transaction can stop the next transaction in the chain, and the whole market becomes illiquid. If there are no first-time buyers to absorb the entry-level supply, the whole machine stops running.

Toronto detached prices fell even more in raw dollar terms, down roughly $100,000 from June. The 905 result carries broader market weight because that region recorded 2,098 detached transactions, compared with 691 in the 416.

Sellers pulled back faster than buyers

The supply response deserves close attention. New listings fell 17.8 per cent year over year to 14,484. Active listings declined 12.1 per cent to 26,098. Sales, by comparison, slipped only 0.9 per cent.

This produced modest tightening. The sales-to-new-listings ratio moved from 36.5 per cent in June to 37.1 per cent in July, while months of inventory eased from 4.7 to 4.6. While we’re still way below the SNLR number for the last several years, there has been a consistent improvement across the last few months. That doesn’t mean the market is turning by any means, but this is what would start to happen first as we progress toward that turn.

Source: TRREB Market Watch catalogue via homiesai.com harness for Realtors

The data supports an inference that more owners are delaying, withdrawing or avoiding listings after seeing weaker prices. TRREB does not publish a termination count in the Market Watch report (I included one from The Habistat available below) so agents should avoid presenting seller withdrawals as a reported statistic. If you’re a Realtor, you can pull this data from using your TRREB login. So far, we’ve seen far fewer cancellations this year than last year.

Source: thehabistat.com via TRREB/PropTX

The “why” of sellers exiting the market always fascinates me, and I think it’s an important layer in what happens next in this market. The market didn’t get tighter because we saw more buyers buy houses. It got tighter because sellers stopped listing or took their homes off the market. It’s easy for people to point to this being the “capitulation” phase on the famous bubble chart.

A market tightened by disappearing sellers behaves differently from one tightened by aggressive buyer demand. July’s scarcity came largely from a retreat in listings, which tells us much about sellers as it does about buyers. Buyer budgets continued to determine the clearing price, but sellers determined the inventory that could eventually give buyers less negotiating power. As the people who need to sell slowly disappear and we move through the renewal wall, do we get to the cohort of sellers who have equity and are a lot less motivated than the sellers of 2025 and 2026? If so, are they simply giving up on selling their homes because they can’t get their price or terms, and they’ll wait it out until we see a better market, or they’ll rent the property out in the meantime instead of selling? Data would suggest this is possible, given we’ve seen some of the highest new rental listings in the last two years:

Source: thehabistat.com via TRREB/PropTX

Buyers still hold the negotiating leverage

With all that being said regarding sellers, several indicators continue to favour purchasers. GTA properties took 45 total days on market when relistings were included, up from 40 a year earlier.

Source: TRREB Market Watch catalogue via homiesai.com harness for Realtors

The average sale closed at 97 per cent of the latest asking price. With 4.6 months of inventory and a 37.1 per cent sales-to-new-listings ratio, buyers retained meaningful choice.

These numbers should shape every listing presentation this summer. Spring comparables can overstate today’s price. July closings and current competing inventory deserve more weight. Sellers who insist on an expired price expectation risk accumulating days on market, reducing the asking price later, or leaving without a sale.

Agents representing buyers can continue to negotiate, particularly in expensive detached segments. They should also watch active inventory closely. Continued seller withdrawals would gradually reduce selection and could stabilize prices faster than buyers might expect, even without a major improvement in demand.

The fall market’s 3 tests

Three measures will show whether July marked the beginning of a floor.

First, active listings must continue moving lower. Second, the HPI needs several consecutive firm readings; one seasonally adjusted increase offers too little evidence. Third, 905 detached prices need to stabilize. That segment’s size, price point and dependence on move-up buyers make it a useful stress test for the wider GTA.

I would hazard a guess that neither of these three tests will pass in 2026. For now, the market remains caught between seller fatigue and buyer restraint. Fewer owners are volunteering to sell into weakness. The buyers who remain have enough inventory, financing pressure and recent evidence to resist aggressive asking prices.

The likely path is a continuation of the slow grind: supply tightens around the edges while price discovery continues through lower offers, longer selling times and selective transactions.

The post Foch: Toronto sellers are cutting supply before prices find a floor appeared first on REM.