New data heading into 2026 confirms what many buyers, builders, and lenders already feel on the ground: 2025 was the weakest year for new home development in the Greater Toronto Area in more than four decades. Prices fell sharply, sales collapsed, and yet housing is still out of reach for most end-users.
This isn’t a typical housing slowdown. It’s a structural reset — and the pain is spreading.
New Home Prices Are Down 25% — But Still Too Expensive for Buyers
Across Toronto and the Greater Toronto Area, new home prices continued sliding into year-end.
Single-family homes saw the steepest erosion. Benchmark prices dipped again in December, pushing total declines to roughly 25% below the 2022 peak. That sounds dramatic — until you realize prices have only fallen back to early-2021 levels.
In other words, even after shedding nearly half a million dollars from peak values, new homes are still priced for an income reality that no longer exists.
Condo prices have held up slightly better on paper, but cracks are forming. New condo prices edged lower again and now sit nearly 20% below their highs, yet remain stubbornly elevated compared to buyer incomes. The result? Buyers aren’t rushing in — they’re waiting.
Sales Collapse: The Slowest Year for Developers Since the Early 1980s
If prices tell part of the story, sales tell the rest — and it’s brutal.
December recorded one of the weakest new-home sales months in modern history. Only a few hundred units sold across the entire GTA, marking the worst December in roughly 30 years.
Zooming out, the full-year picture is even worse:
2025 logged the fewest new-home sales since at least 1981
Activity was weaker than during the early-1990s real estate crash
Condo sales fell sharply year-over-year, despite being the “affordable” option
Developers are building homes that buyers simply can’t — or won’t — absorb at current prices.
Inventory Remains Near Cycle Highs — Especially in Condos
Supply hasn’t disappeared. It’s just stuck.
New-home inventory across Greater Toronto remains near multi-year highs, even after modest pullbacks. Condos make up the bulk of that supply, with tens of thousands of units still looking for buyers.
What’s more concerning is the shift happening underneath:
Condo inventory is easing, but demand isn’t improving
Single-family inventory is rising, hitting levels not seen since the post-financial-crisis slowdown
That matters because weakness at the top of the market tends to drag everything else down with it. When higher-end homes struggle to sell, pricing pressure doesn’t stay contained — it spreads.
Why This Downturn Feels Different
This isn’t just about higher interest rates.
Developers are trapped between:
Buyers whose incomes can’t support today’s prices
Construction costs that remain historically high
Financing conditions that punish risk
Cut prices too far and projects become uneconomical. Hold prices steady and inventory sits unsold. The result is a growing backlog of stalled or delayed projects — a kind of housing limbo.
What This Means for 2026
Toronto real estate is entering 2026 with:
Weak demand
Elevated inventory
Falling prices
Limited flexibility for builders
Unless incomes rise meaningfully or construction costs fall sharply, pricing pressure is likely to continue — especially for new developments and pre-construction units.
For buyers, this may eventually open doors. For developers and lenders, it’s a reminder that the last decade’s playbook no longer applies.
The Toronto housing market isn’t crashing overnight — but it is being forced to reconcile with reality.
Final Thoughts — The Lendworth Perspective
This market isn’t broken — it’s mispriced.
What we’re seeing across Toronto and the GTA isn’t a sudden collapse, but the delayed unwind of a decade built on ultra-low rates, speculative demand, and income assumptions that no longer exist. Prices are adjusting, but not fast enough. Demand has weakened, but supply is still coming. And developers are caught in the middle, unable to cut deeply without breaking projects.
For borrowers, this environment creates stress — but also opportunity. Equity still exists, even when liquidity disappears. Traditional lenders are tightening, pulling back, or saying no altogether. That’s where private capital becomes essential, not optional.
For developers and investors, 2026 will reward discipline over optimism. Projects with conservative leverage, strong locations, and realistic exit strategies will survive. Those built on yesterday’s assumptions won’t.
At Lendworth, we’re not betting on headlines or hoping for a rate miracle. We lend based on real value, real equity, and real downside protection. Markets like this are exactly why private lending exists — to provide capital when timing, structure, and flexibility matter more than perfect conditions.
The takeaway is simple:
Toronto real estate isn’t ending — it’s resetting. And in every reset, capital that understands risk doesn’t retreat. It adapts.