The January 2026 real estate numbers for the Greater Toronto Area (GTA) are officially in, and they tell a story of a market under significant pressure. For anyone waiting for a “return to normal,” the latest data from the Toronto Regional Real Estate Board (TRREB) suggests that “normal” has been redefined by the persistent weight of high borrowing costs.
The headline figure is hard to ignore: home sales across the GTA plummeted by 19.3 per cent compared to January 2025. With only 3,082 transactions completed throughout the month, the market is operating at a significantly lower velocity than we have seen in recent years.
The Interest Rate Chokehold
The primary culprit behind this cooling trend isn’t a lack of desire to own property, but rather the stark reality of the current lending environment. As of January 2026, the Bank of Canada’s Overnight Rate stands at 2.3 per cent, with the Prime Rate at 4.5 per cent. While these numbers might seem manageable in isolation, they have pushed retail mortgage rates to levels that are pricing many would-be buyers out of the market.
Current mortgage data shows a 5-year fixed rate at 6.09 per cent, while the 1-year and 3-year options sit at 5.84 per cent and 6.05 per cent, respectively. When combined with the “stress test” requirements, the barrier to entry for the average GTA family has become a formidable wall.
Prices Following the Downward Trend
When sales volume drops as sharply as 19 per cent, price corrections are inevitable. The MLS Home Price Index (HPI) Composite benchmark fell by 8 per cent year-over-year. Perhaps more psychologically significant for the market is the average selling price, which has now officially dipped below the million-dollar mark.
In January 2026, the average price for a GTA home was $973,289, representing a 6.5 per cent decline from the $1,041,171 recorded in January 2025. For a city that has spent years acclimating to seven-figure averages as the “entry point,” this shift represents a major transition in market sentiment.
A Breakdown by Housing Type: Where is the Impact Heaviest?
The cooling effect is not being felt equally across all sectors. The January report reveals a particularly difficult month for the condominium and townhouse segments:
- Detached Homes: Sales fell 13.6 per cent across the TRREB service area, with the average price sitting at $1,277,915.
- Condo Apartments: This sector saw a staggering 26 per cent drop in sales volume, with the average price sliding to $604,759.
- Townhouses: Transactions in this category were down 23.7 per cent, with an average price of $819,543.
- Semi-Detached: This segment saw a 19.2 per cent decrease in sales, with prices averaging $945,967.
The 26 per cent collapse in condo sales is particularly noteworthy. Often seen as the “stepping stone” for first-time buyers, the condo market is highly sensitive to interest rate fluctuations. When the 5-year fixed rate hits 6.09 per cent, the monthly carrying costs on a $600,000 condo can become prohibitive for those without a substantial down payment.
Inventory and the Seller’s New Reality
Interestingly, while sales were down, the number of people trying to sell also tightened. New listings were down by 13.3 per cent compared to last year, with 10,774 properties hitting the market in January.
However, because sales are moving so slowly, the total number of active listings rose by 8.1 per cent, reaching 17,975 units. This means that while fewer people are listing their homes, those that are on the market are staying there much longer. The Average Property Days on Market (PDOM) climbed to 67 days, a 21.8 per cent increase from the 55 days seen a year ago.
For sellers, the “bidding war” era has largely vanished. The Average Sales-to-List Price (SP/LP) ratio sat at 97 per cent in January, indicating that most homes are selling for below their asking price.
Regional Highlights: Winners and Losers
The “905” regions generally saw more activity than the “416” core in certain categories, though no area was immune to the slowdown.
- City of Toronto (416): Reported 1,074 sales with an average price of $948,698.
- Peel Region: Saw 609 sales, with Brampton contributing 266 of those transactions.
- Durham Region: Remained one of the more affordable pockets with an average price of $818,694, helping it maintain a slightly higher sales-to-new-listings ratio trend of 39.2 per cent.
- Halton Region: Maintained the highest average price among the suburban regions at $1,131,543, though sales volume here was limited to 326 units.
The Economic Backdrop: Why 2026 is Different
The real estate market does not exist in a vacuum. Broader economic indicators are playing a massive role in buyer hesitation. While Real GDP Growth was up 2.6 per cent in Q3 2025, the local employment picture is more complex.
The Toronto Unemployment Rate stood at 8.1 per cent in December 2025. While this was a slight improvement from previous months, it remains high enough to cause concern for consumer confidence. Furthermore, inflation (CPI) grew by 2.4 per cent in December. While this is close to the Bank of Canada’s target, it hasn’t yet been enough to trigger the aggressive rate cuts many in the real estate industry were hoping for.
The Barhoot.com Verdict: What Should You Do?
For Sellers, the message is clear: patience and pricing are your only tools. With homes taking an average of 67 days to sell, you cannot expect a quick exit. If your property isn’t priced at or slightly below the current benchmark for your neighborhood, it will likely contribute to the growing “active listings” tally rather than the “sold” column.
For Buyers, this is the most “negotiable” the Toronto market has been in years. With an average price of $973,289 and a Sales-to-List ratio of 97 per cent, the power has shifted. However, the cost of borrowing remains the primary obstacle. Those with large down payments or the ability to manage 6 per cent interest rates are finding themselves in a rare position where they can dictate terms to sellers.
Looking Ahead to the Spring Market
All eyes are now on the Bank of Canada. With the overnight rate at 2.3 per cent and a relatively stable inflation rate of 2.4 per cent, many are speculating on a Q1 or Q2 rate pivot. If the 5-year fixed rate begins to soften toward the 5 per cent mark, we could see a release of the “pent-up demand” that has been building throughout this slow January.
Until then, the GTA housing market remains in a state of cautious hibernation, waiting for the financial thaw that will finally allow sales volume to bloom again.
