HST rebate and bulk buying spark first annual sales gain since 2023, but pipeline faces record drop
New condominium apartment sales in the Greater Toronto Hamilton Area (GTHA) rose 52% year-over-year to 702 units in Q2-2026 — the first annual gain since Q3-2023, according to Urbanation Inc.'s Q2-2026 Condominium Market Survey.
Ontario's enhanced harmonized sales tax (HST) rebate and a surge in bulk investor purchases were credited with pulling the market off its 35-year floor.
Despite the headline improvement, the recovery remains thin. Sales were still 86% below the 10-year average for second-quarter periods. Cautious buyers cited ongoing economic uncertainty and, until June, the absence of finalized rules governing Ontario's new rebate program.
The provincial and federal governments confirmed the expanded HST relief — offering a maximum rebate of $130,000 on new homes valued up to $1 million — in March 2026, though the federal legislation required to deliver the full benefit did not receive royal assent until June 18, 2026.
Nearly all of the quarter's activity was concentrated in completed, developer-held units, where sales more than tripled year-over-year to 535 units, driven in part by large-scale bulk transactions with investment groups.
Pre-construction sales moved in the opposite direction, tumbling 80% annually to just 50 units.
Urbanation attributed that divergence to the rebate's eligibility structure: to qualify for pre-construction purchases, construction must begin before March 31, 2027 and reach substantial completion by December 31, 2029, a timeline that creates real qualification risk for early-stage buyers.
The GTHA condo market entered Q2-2026 having already recorded its weakest sales quarter in over three decades, with just 246 units sold in Q1-2026 at a 35-year low.
Asking prices for completed, unsold condos slipped 2% annually to an average of $1,186 per square foot, a record 43% premium over average resale prices of $830 per square foot in recently registered projects.
Where sales did occur, transactions generally settled well below asking, with some bulk deals closing beneath resale-equivalent values.
A rebound built on a fragile foundation
Combined new and resale condo inventory across the GTHA held at 12,106 units at quarter's end, up just 1% year-over-year, the slowest pace of growth in three years.
Developer-held completed stock climbed to a record 5,001 units, 68% above 2025 levels.
Partially offsetting that, active resale listings fell 21% to 7,105 units, a three-year low and the largest annual decline in more than four years.
Combined months of supply eased to 7.3 from a peak of 8.5 a year earlier, the first meaningful improvement since the current downturn began.
The composition of resale inventory also challenges a persistent market narrative. Units under 600 square feet accounted for 20.4% of active resale listings in Q2-2026, down from a high of 24.3% in 2024.
Of the 5,001 developer-held completed units, 54% are over 700 square feet, with 57% in two-bedroom or larger layouts, pushing back on assumptions that the condo downturn is driven primarily by a glut of micro units.
Toronto condo prices keep falling, but opportunity is emerging.
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 9, 2026
Micky Khaneka of MKG Mortgages says improving affordability is creating a rare opening for first-time buyers, even as excess supply continues to weigh on the condo market.https://t.co/ycrAG2UloX
The coming supply crunch
Even as early stabilization signals emerge, the longer-term supply picture has grown more urgent. Combined pre-construction and under-construction inventory fell to 48,710 units in Q2-2026. That's down 37% year-over-year and 62% below the 2022 peak of approximately 127,000 units.
No new project launches occurred for a second consecutive quarter, an additional 1,022 units were cancelled in Q2 (bringing the total since the start of 2024 to 11,653 units), and construction starts registered just 448 units for the quarter.
"After more than four years of decline, it's an important signal to see new condo sales respond to the elimination of HST and investor activity," said Shaun Hildebrand, president of Urbanation.
"That said, this improvement is coming off an extremely low base, and pre-construction demand remains largely dormant. With virtually no new units being added to the pipeline, condo supply is set to see its largest ever decline in the coming years."
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