Toronto-area home sales are showing signs of renewed strength, prompting economists to revise upward their forecasts for the second half of 2026. Toronto-Dominion Bank economist Rishi Sondhi attributes the improvement to a combination of factors, including a release of pent-up demand and a closer alignment between the price expectations of buyers and sellers. While overall listings in the Greater Toronto Area (GTA) have declined compared to the same period last year, this tightening supply appears to be supporting firmer prices heading into 2027, though prices have not yet stabilized.

The most active segment of buyers remains those seeking homes priced between $1 million and $1.5 million, a range often associated with single-family homes. Condominiums priced below $1 million continue to attract cautious buyers anticipating further price declines, while move-up purchasers in the $3 million to $5 million bracket are selectively engaging when prices are competitive. However, the luxury market above $5 million exhibits more hesitation. Broker Andre Kutyan from Harvey Kalles Real Estate notes that although some properties attract multiple offers, others linger on the market with fewer bids and require significant price reductions before closing, reflecting a shrinking pool of ultra-high-end buyers.

For instance, a five-bedroom home in Lytton Park initially listed near $7 million sold after a drawn-out process for about $5.5 million, while several other properties that closed above $10 million in the first half of 2026 represent a decline from six such sales in the same period last year. According to Kutyan, many upscale homeowners are sellers only, often relocating outside Canada or keeping capital invested in financial markets rather than real estate. This dynamic contributes to what he describes as a contracting luxury segment.

Increasing activity in the late spring and early summer is also encouraging some homeowners who delayed listing in earlier months to enter the market. Kutyan has multiple listings scheduled to launch in early July, responding to renewed buyer interest. However, a recent Bank of Canada financial stability report has raised concerns by indicating that roughly 10 percent of GTA borrowers renewing their mortgages in 2027 could face difficulties refinancing. This has prompted some owners to consider listing sooner to avoid potential forced sales.

Despite this, economists including Sondhi view the risk as limited, noting that most borrowers will likely renew with their existing lenders. Furthermore, the peak period for high-stress mortgage renewals has mostly passed, according to TD economist Maria Solovieva. The overall share of financially strained borrowers remains small.

Sondhi also highlights that the current and expected reduction in new condominium completions in the GTA will likely reduce future supply, possibly offsetting any increase in sales driven by financial duress. Many homeowners reluctant to sell without meeting their price targets may further constrain supply. Across Canada, the forecast anticipates a slowing of listings, particularly in Ontario.

Looking nationally, the uptick in sales within Ontario and British Columbia is lifting the outlook for 2026, despite cooling markets elsewhere. Sondhi reiterates caution due to factors such as weak population growth, subdued hiring, geopolitical uncertainty, and cost-of-living pressures, which may keep overall sales below pre-pandemic levels. Nevertheless, compared to early-year projections, the housing market outlook has brightened as buyer demand re-emerges in key regions.