July Market Update: Is Toronto’s Housing Market Quietly Changing Direction?

In last month’s June market update, I highlighted two key signs that could potentially signal a market turnaround, if they continue in the months ahead.

The first was that sales activity in June almost caught up to last year’s pace, with only 2.4% drop.

The second was a shift in inventory growth.  

After 5 straight months of double-digit increases, new listings rose only 2.1% from May to June, a very noticeable slowdown.

So, what happened in July?

Did these early signs of recovery continue?

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#1 Sales Activity

You might have already seen the headlines:

“Greater Toronto housing market sees best July in four years.”

Let’s take a look at the numbers behind that.

Back in July 2021, the wild year after Covid.

We saw 9,390 sales.

Then came the rate hikes.

In July 2022, sales dropped sharply to 4,912.

In July 2023, there was a slight recovery with 5,250 sales.

July 2024?  5,391 sales.

So for the past 3 years, July sales hovered around the 5,000 mark.

But this year, in July 2025, we saw 6,100 sales.

That’s a 10.9% jump from last year and the strongest July since 2021.

I think we are starting to see a clear sign that buyers are stepping back into the market.

They are taking advantage of lower home prices.

And now, they are also benefiting from falling mortgage rates, with the 5-year fixed rate hovering just below 4%.

#2 Inventory Levels

We started the year with 17,000 active listings.

Month after month, inventory climbed at a double-digit pace, peaking at nearly 31,000 listings by May.

In June, active listings still increased, but the growth slowed sharply to just 2.1%, reaching 31,603.

Now in July, for the very first time this year, inventory has declined.

Active listings dropped 4.4% to 30,215.

That’s a key milestone.

Listings are finally being absorbed.

Let’s break it down by property type.

For detached homes, active listings dropped 3.3% from June to July.

Condos, down 4.65%.

Townhouses saw the biggest drop at 6.7%.Inventory is falling across all home types.

This could be a sign that we are starting to enter the early stage of a real market recovery.

#3 Prices

When it comes to prices, we are still below last year’s levels.

Detached homes are down about 5%.

Townhouses, down around 7%.

Condos, down around 9%.

We likely won’t see meaningful price growth until more inventory is absorbed.

It won’t happen overnight, but the signs so far are encouraging.

So what’s the big picture here?

Sales are up.

Inventory is finally coming down.

And while prices are still lower than last year, we are seeing the early signals of a market that is beginning to rebalance.

Of course, this is not a full blown recovery yet.

But the data from July is the clearest sign we have seen all year that the market might be turning.

If inventory keeps falling and if buyer confidence continues to return, we could look back at this summer as the start of the next upswing.

Real estate always goes in cycles.

Are we quietly starting the next cycle now?

I will be watching very closely and I will be right here to break it all down for you every month.

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