Sales in the Toronto housing market ground to the slowest pace since the first month of the pandemic as buyers contend with some of the highest borrowing costs they’ve seen in 15 years. 

Just 3,100 homes were sold in Canada’s largest city in January, the lowest number since April 2020, shortly after the country went into its first Covid-19 lockdown. There were 10 fewer sales in January compared to December 2022, according to data released Friday by the Toronto Regional Real Estate Board.

A run-up in borrowing costs has dramatically slowed the housing market in Canada, with sales drying up and prices coming under pressure. With so little action in Toronto’s market in January, the benchmark price for a home edged down 0.2 per cent from December to roughly $1.08 million (US$810,000), the report showed.

The benchmark price was down 14 per cent from a year earlier. 

“Home prices declined over the past year as homebuyers sought to mitigate the impact of substantially higher borrowing costs,” said Jason Mercer, the real estate board’s chief market analyst.

Despite the recent pullback, buyers are still facing a much more expensive market than a few years ago, with prices 28 per cent higher than before the pandemic. Many economists expect costs will have to come down even more in order for a wider swath of buyers to afford homes at current mortgage rates.

The Bank of Canada raised its benchmark interest rate to the highest level since late 2007 as it seeks to rein in inflation. Higher borrowing costs are squeezing potential buyers, making it harder to afford homes even as prices ease.

Fewer sellers put homes on the market in January, with new listings falling 3.7 per cent from a year earlier. But inventory still piled up: 9,299 properties were for sale, more than double last year’s total.

January is often one of the slowest months for the real estate market broadly, as many people wait until spring to do deals. Even on a seasonally adjusted basis, sales were down 49 per cent from a year ago. 

The Toronto Regional Real Estate Board, which represents more than 70,000 people who work in the residential and commercial property market, pointed to some slight signs that more buyers might start to return, saying that sales “appear to have found some support.” The Bank of Canada has indicated that it might pause rate hikes, easing the upward pressure on mortgage rates.