2026 Pre-Construction Real Estate Economic Update
How Today's Pre-Construction Slowdown Could Create Tomorrow's GTA Condo Supply Crisis and Drive Price Recovery
By R. Scott Davie
July 21, 2026
The Greater Toronto Area's pre-construction housing market has endured the most significant downturn in modern history. However, beneath the headlines lies a story that will have major implications for housing supply and pricing over the next decade.
According to Altus Group data, GTA pre-construction high-rise condominium sales fell 54% in 2025 to just 2,067 units. However, the first signs of recovery emerged in 2026, with sales increasing 41% to 1,108 units from January through May compared to the same period in 2025.
Developers responded decisively to declining demand. New high-rise project launches fell 77% in 2025 to 1,131 units and declined a further 49% during the first 5 months of 2026 compared with the same period a year earlier.
As a result, remaining unsold high-rise inventory declined by 7% throughout 2025 and fell another 13% to 13,138 units by May 2026.
Inventory levels matter. Limited supply generally helps stabilize pricing, while oversupply combined with weak demand typically places downward pressure on values.
Notably, high-rise prices have remained remarkably resilient. The benchmark price increased by less than 1% in both 2025 and the first 5 months of 2026, currently sitting at approximately $1,029,500.
One reason for this resilience is the nature of condominium development. High-rise projects often require approximately seven years from initial sales launch to final registration. Labour, material, financing, and development costs are largely fixed long before completion. As a result, developers have limited ability to reduce prices without eroding or eliminating profit margins. Typically, lenders will not finance projects unless reasonable margins are maintained.
The low-rise sector operates quite differently. Many projects can be completed within 18 to 24 months, allowing developers to adjust pricing more quickly as market conditions, labour costs, and material expenses change.
The evidence of this flexibility can be seen in recent figures. GTA low-rise pre-construction sales declined 37% in 2025 to 3,247 homes but rebounded sharply in 2026, increasing 139% to 3,015 homes sold between January and May compared to the same period in 2025.
Developers also reduced supply aggressively. New low-rise project launches fell 42% in 2025 to 3,992 homes and declined another 83% during the first 5 months of 2026 compared to the same period in 2025.
Remaining low-rise inventory increased 15% in 2025 but subsequently declined 2% to 5,635 homes by May 2026.
The benchmark price for low-rise homes fell 9% during 2025 to approximately $1.41 million before rising 1% to $1.428 million by the end of May 2026.
The Coming High-Rise Supply Shortage
Perhaps the most important trend is not what is happening today, but what will happen several years from now.
High-rise condominium completions increased 19% in 2025 to approximately 13,200 units. However, completions have already declined by 22% during the first 5 months of 2026 compared to the same period in 2025.
The reason is straightforward: today's housing completions are the result of sales made years earlier.
High-rise sales have declined dramatically, year over year, for 4 consecutive years:
Down 33% in 2022
Down 37% in 2023
Down 63% in 2024
Down 54% in 2025
Developers typically require 75% to 85% firm sales and substantial purchaser deposits before construction financing is available. When sales collapse, Developers do not sell enough units to begin construction.
The consequence is that the steep decline in sales witnessed since 2022 is likely to result in a collapse of Highrise completions beginning around 2028 or 2029.
Since developers often require 2 years or more to secure sufficient sales and financing before construction begins, the last 4 years, weak sales environment could translate into 6 years or more of a dramatic lack of Highrise supply being delivered to market.
Demand Has Not Disappeared
Housing demand is fundamentally driven by life events. People start careers, form households, get married, have children, divorce, relocate, and eventually downsize. These life transitions continue regardless of market conditions.
During periods of uncertainty, many households postpone purchasing decisions. History suggests that postponed demand does not disappear; it accumulates.
We witnessed this after the 2008-2009 financial crisis and again following the market disruption that followed Ontario's Fair Housing Plan in 2017. In both cases, demand returned strong, leading to higher sales activity and rising prices.
While every cycle is different, there is evidence that pent-up demand continues to build throughout the GTA housing market today.
Current Factors Supporting Recovery
Several factors are contributing to improved market confidence:
The Bank of Canada reduced its overnight lending rate from 5.0% to 3.25% during 2024 and further to 2.25% by the end of 2025.
Interest rates are currently expected to remain relatively stable in the medium term.
Governments are reducing lot levies.
Political uncertainty has eased following the April 2025 Federal Election.
Global geopolitical risks remain, but concerns surrounding some major international conflicts have become less dominant in economic decision-making.
The introduction of enhanced HST rebate programs has improved affordability for purchasers of qualifying new homes.
The impact of these factors is already becoming evident in the low-rise market, where sales activity has accelerated significantly, especially due to the new enhanced 13% HST Rebate.
High-rise sales are also benefiting from the rebates, though at a slower pace. Over time, these incentives should help absorb existing standing inventory and units currently under construction, leading to a dramatic drought in supply.
A Short-Term Challenge: Peak-Priced Closings
Not all news is positive.
Many purchasers who bought pre-construction condominiums at peak pricing between late 2021 and early 2022 may face appraisal shortfalls at closing.
In some cases, current appraised values may be 15% to 25% below original purchase prices. This could require buyers to contribute additional equity to satisfy lender requirements.
Fortunately, RBC has introduced a program that accepts the Purchase Price as the appraised value for qualified new High-rise condo mortgage applicants. In addition, many purchasers possess substantial equity in other properties and remain motivated to close due to contractual obligations and the financial consequences of default.
Based on my own analysis, approximately 16,000 high-rise units were sold during the market peak. If 25% to 35% fail to close, approximately 4,000 to 5,600 units could return to the marketplace as standing inventory.
While meaningful, this represents only a relatively short-term supply increase when viewed against historical levels of strong demand, like 2021.
Why Developers May Still Be Cautious
Even if market conditions improve, developers face several challenges.
Trade uncertainty continues to affect material costs for products such as steel, glass, HVAC systems, and appliances. Labour availability has also become a concern. Following several years of reduced construction activity, many skilled workers have left the sector or relocated to other regions.
As a result, developers face uncertainty regarding future labour costs, labour availability, and construction expenses.
This may lead builders to proceed cautiously, launching fewer projects and smaller buildings until confidence in long-term demand is firmly re-established.
Looking Ahead
The emerging picture is relatively clear.
Existing high-rise inventory is gradually being absorbed. New project launches remain historically low. Condominium completions are expected to decline meaningfully very soon as a result of 4 years of weak sales and limited construction starts.
At the same time, interest rates have declined, government incentives have improved affordability, and pent-up, end-user demand continues to accumulate.
The low-rise market appears positioned for a healthier recovery because developers can respond more quickly to rising demand. The high-rise market, however, may face a very different reality: a prolonged shortage of new supply combined with a gradual return of demand.
If these trends continue, upward pressure on high-rise pricing could begin emerging as early as 2028 and become more pronounced thereafter.
The Takeaway
Markets are impossible to predict with certainty. However, today's data suggests that the GTA pre-construction market may be much closer to the end of its downturn than the beginning.
For buyers, the next several years may represent a rare opportunity to purchase new condos before the effects of a future supply shortage become fully reflected in pricing.
For investors, end-users, and industry professionals alike, the most important story may not be today's market weakness but tomorrow's lack of housing supply that will drive price recovery.