The Greater Toronto Area (GTA) real estate market showed more signs of change in May 2025, offering improved affordability and greater housing inventory compared to the same time last year. While home sales were down, more listings gave buyers better choices and stronger negotiating power.

If you’ve been watching the Toronto housing market and wondering if now is a good time to buy, here’s what you need to know.

🔍 What Happened in the GTA Housing Market – May 2025

According to the Toronto Regional Real Estate Board (TRREB), there were 6,244 home sales in May 2025, which is 13.3% fewer sales compared to May 2024. However, new listings went up by 14%, reaching a total of 21,819 homes listed on the MLS® System.

This means buyers now have more options than they did last year, which helps them take their time, compare properties, and negotiate better deals.

“Homebuyers have certainly benefited from greater choice and improved affordability this year,” said TRREB President Elechia Barry-Sproule. “But each neighbourhood is different, and working with a REALTOR® who knows your area is key.”

💰 Have Home Prices Dropped in the Greater Toronto Area?

Generally speaking, yes. Average prices have come down a bit. The average across the GTA was $1,120,879 in May 2025—down 4% year-over-year. The MLS® Home Price Index, which measures home value trends more accurately than averages alone, also dropped 4.5% compared to May 2024. Not all property types and areas are equal with some doing better then others.

However, compared to April 2025, both prices and sales slightly increased month-over-month, showing early signs of stability in the market.

📉 Why Are Sales Still Down?

You might wonder if homes are more affordable and borrowing costs are lower than last year, why are fewer people buying?

TRREB Chief Information Officer Jason Mercer explained that the slowdown isn’t just about prices or mortgage rates—it’s about economic confidence.

“Once households feel more secure about trade stability and economic growth, home sales will likely pick up. A further drop in interest rates would also encourage more activity, especially from first-time buyers.”

🏗️ What Could Help Canada’s Housing Market?

TRREB’s leadership also called for more action from the federal government to address long-term housing affordability. Some key suggestions include:

• Lowering housing taxes and fees

• Encouraging innovative construction technologies

• Speeding up the home building approval process

• Supporting more housing development across Canada

“Home construction not only adds supply but also boosts the economy. And with inflation staying low, a rate cut would help even more,” added TRREB CEO John DiMichele.

The Toronto real estate market in May 2025 is leaning more in favor of buyers, thanks to more homes for sale and softer prices. Still, many people are cautiously waiting for better economic news or lower interest rates.

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Home sales in the GTA were down 13.3% this May compared to last year, but new listings rose by 14%, giving buyers more choices and stronger negotiating power.

The average selling price was around $1.12M — about 4% lower than May 2024. However, prices and sales ticked up slightly from April, showing early signs of stability.

Lower home prices and borrowing costs are making things more affordable, but some buyers are still waiting for interest rates to drop and the economy to feel more secure.

If confidence improves and rates come down, more people could jump back into the market. Right now, buyers have more room to negotiate, and sellers need to price wisely.

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The Bank of Canada just announced that it’s keeping its key interest rate steady at 2.75%. That means borrowing costs, like loans and mortgages, aren’t going up (at least for now). The Bank Rate is set at 3%, and the deposit rate is 2.70%. So, why did the Bank decide to hold steady?

There’s still a lot of tension around global trade especially between the U.S. and China. While things have cooled a little and new talks are happening, the situation is still unpredictable. Tariff rates (those taxes on imports) are much higher than they were at the start of 2025, and more changes could be on the way.

Even though the world economy has been holding up, some of that strength came from businesses rushing to act before new tariffs kicked in. That’s not likely to last. In the U.S., people are still spending, but imports have slowed the economy a bit. Inflation in the U.S. is above 2%, and Europe is leaning on exports and defence spending. China’s growth is slowing down, too.

What’s Happening in Canada?

Canada’s economy grew by 2.2% in the first quarter—slightly better than expected. A big part of that growth came from increased exports to the U.S. and businesses stocking up on inventory. But consumer confidence has dropped, and people are spending a bit less. Housing activity is down, and unemployment has gone up to 6.9%, especially in industries that depend heavily on trade.

Looking ahead, the Bank expects the Canadian economy to slow down in the second quarter. Exports and inventory boosts are expected to fade, and household and business spending is likely to stay soft.

About the Inflation

Canada’s inflation rate dropped to 1.7% in April, mostly because the federal carbon tax was removed. But if you take taxes out of the picture, prices actually rose by 2.3%—a bit higher than the Bank expected.

People are still worried that tariffs will make things more expensive, and many businesses say they plan to pass those costs onto customers. So, even though the economy is softening, price pressures haven’t gone away.

Why the Bank Is Staying Put (For Now)

With all this uncertainty—especially around U.S. trade policy—the Bank of Canada is choosing to wait and see. Some parts of the economy are slowing, but inflation is still higher than they’d like in certain areas. The Bank wants to make sure inflation doesn’t get out of control, while also not putting more strain on a slowing economy.

They’re watching a few key things very closely:

• Will U.S. tariffs reduce demand for Canadian products?

• How will this affect investment, jobs, and household spending?

• How quickly will rising costs show up in consumer prices?

• Are inflation expectations rising?

What’s Next?

The Bank’s next interest rate decision and full economic report will be released on July 30, 2025. Until then, they’ll be keeping a close eye on the data and any changes in global trade policies.

The Bank of Canada is staying cautious. The economy is showing some cracks, but inflation is still a concern. So, they’re keeping rates steady while they wait for more clarity—especially from our neighbours in the U.S.

If you're a business owner or homeowner, now might be a good time to review your financial plans. While rates aren’t going up, the outlook remains uncertain.