Ontario’s new-home market has suddenly found a pulse. Builders say sales across the province jumped 130% year over year in the second quarter of 2026, coinciding with the launch of a temporary enhanced HST rebate designed to cut the cost of newly built homes.
The rebound is striking because it follows an exceptionally weak 2025, when affordability pressures and buyer hesitation pushed new-home activity to historic lows in parts of the province. The latest figures suggest tax relief has brought some purchasers back, particularly in the low-rise market. But the recovery is uneven: condominium sales remain deeply depressed, and national housing forecasters still expect Ontario construction to struggle through 2026.
Ontario’s Q2 Sales Jumped From 3,645 to 8,410
The headline number is hard to ignore. Data released by the Building Industry and Land Development Association and the Ontario Home Builders’ Association show 8,410 new homes were sold across Ontario in the second quarter of 2026, compared with 3,645 during the same period a year earlier. That works out to roughly a 130% year-over-year increase, a dramatic reversal from 2025’s depressed level.
Industry analysis prepared using BILD, OHBA and Altus Group sales data estimates that 4,765 of those Q2 transactions were incremental sales associated with the HST relief. That distinction matters: the figure is an estimate of the program’s impact, not a count of buyers who individually reported purchasing because of the rebate. Even so, the timing is notable. The enhanced program took effect for qualifying agreements beginning April 1, placing the entire second quarter inside the new incentive window and giving builders a full quarter to measure the response.
What the HST Rebate Is Worth
The incentive is unusually large by Canadian housing-tax standards. Under the Ontario Enhanced New Housing Rebate, eligible buyers can recover the full 8% provincial portion of HST on a qualifying new home valued at up to $1 million, with provincial relief capped at $80,000. Ontario also provides additional relief equivalent to as much as the 5% federal portion, bringing total potential relief to as much as $130,000.
For homes priced between $1 million and $1.5 million, the provincial rebate remains a flat $80,000, while the additional top-up can preserve substantial savings depending on eligibility. The temporary measure generally applies to qualifying purchase agreements signed from April 1, 2026, through March 31, 2027. That limited window gives buyers a clear financial reason to move sooner rather than later, especially when six-figure tax relief can materially change the amount that must be financed and the mortgage a household must carry.
Low-Rise Homes Are Leading the Recovery
The strongest response has come from buyers shopping for detached houses, semis and townhomes rather than high-rise condos. In the GTA, BILD reported 902 single-family new-home sales in June, 36% above the 10-year average for that month. It was the third consecutive month in which low-rise sales outperformed their historical average after the rebate was introduced.
Price movement has reinforced the effect. BILD said the GTA benchmark price for a new single-family home was $1,275,458 in June, down 15.5% from a year earlier before accounting for any HST rebate. That combination — lower benchmark pricing plus a potentially large tax benefit — created a noticeably different affordability equation than buyers faced a year ago. For a household that had been watching from the sidelines, the gap between “not quite workable” and “possible” can shrink quickly when both the purchase price and tax burden move in the same direction.
Condos Are Still Deep in a Slump
The condo side of the market tells a much less celebratory story. BILD reported just 273 new condominium apartment sales in the GTA in June. That was an improvement from June 2025, but it remained 85% below the 10-year average. In May, only 193 condo units sold, leaving that month 89% below its 10-year norm.
Builders and Altus Group point to structural reasons the rebate has not translated as cleanly into high-rise sales. Much of the existing condo inventory was launched under older cost structures, limiting how aggressively projects can reprice. New towers also face longer construction timelines, and industry representatives argue that the rebate’s required start and completion dates are difficult for many high-rise projects to meet. The result is a two-speed recovery: low-rise buyers are responding quickly, while the condo pipeline that normally supplies a large share of Ontario’s future ownership housing remains under pressure and may recover more slowly.
Builders Point to Jobs and GDP
Builders are framing the sales rebound as more than a retail story. Industry analysis tied to the Q2 release estimates that the additional activity helped protect about 17,300 construction-related jobs during the first three months of the program, while preserving roughly $2.8 billion in GDP and about $1.4 billion in gross government revenues. Those figures are economic estimates, not observed payroll or tax receipts, but they show why presales matter.
Earlier modelling by Altus Group warned that weak sales could translate into fewer construction starts, lost employment and lower public revenues later in the decade. Its February analysis estimated that a combined package of HST relief and lower development charges could induce 18,000 to 23,000 net new sales per year. The strong Q2 result gives builders evidence that affordability incentives can unlock demand, although it remains too early to know whether the pace will continue after the first wave of buyers acts.
Why 130% Does Not Mean “Back to Normal”
A 130% increase can sound like a boom, but the comparison point was exceptionally weak. Ontario recorded only 3,645 new-home sales in Q2 2025, and the GTA spent much of early 2026 recovering from historic monthly lows. Even after the rebate began lifting demand, total GTA new-home sales in June were still 52% below the 10-year average because condo activity remained so soft.
That base effect is essential context. A market can post triple-digit year-over-year growth and still operate below normal levels if the previous year was unusually depressed. The low-rise segment has clearly improved, but the broader market has not fully normalized. CMHC’s summer outlook still expects Ontario to face historically weak housing activity in 2026, with construction especially constrained in the condominium sector. The Q2 surge therefore looks more like a sharp rebound from the floor than proof that Ontario’s housing slowdown has ended or construction has returned to normal.
Development-Charge Cuts Could Be the Next Catalyst
The next policy test is development charges. Ontario and Ottawa have also been pushing municipalities to lower fees applied to new construction, which builders say are another major housing cost. In Toronto, the governments announced $1.5 billion in support tied to reducing development charges by roughly 40% to 60%, depending on the housing type and program terms.
That initiative arrived late in the second quarter, meaning builders argue its full effect is not yet visible in the latest provincial sales figures. OHBA chief executive Scott Andison said details of the development-charge program were only beginning to take shape as Q2 ended, with Toronto’s announcement coming June 23. If similar reductions spread to other municipalities, the industry expects another layer of cost relief. Whether those savings translate into lower prices, more project launches or stronger builder margins will be closely watched as projects move from approvals to sales and construction.
The Rebound Still Faces a Difficult 2026 Outlook
The rebound does not erase Ontario’s housing risks. CMHC’s July outlook says high borrowing costs, slower population growth, economic uncertainty and weak buyer confidence are still weighing on demand. It expects historically low levels of construction to be especially visible in Ontario and British Columbia, with the condominium market particularly weak. That creates tension between stronger low-rise sales today and the longer-term pipeline of homes still waiting to be financed and built.
There is also a deadline for buyers. The Ontario enhanced rebate is temporary, and eligibility depends on specific conditions rather than simply buying any new property. The Canada Revenue Agency says buyers are responsible for making sure they qualify; if a builder credits a rebate at closing and the buyer is later found ineligible, the amount may have to be repaid. For purchasers, the opportunity is significant, but the paperwork, timing and eligibility rules matter almost as much as the headline savings.
