The removal of the HST on new homes appears to be giving Ontario’s housing market a much-needed lift, with sales more than doubling this year since the tax break was introduced.
Buyers purchasing a new home can avoid HST if their agreement is signed before March 31, 2027. According to the Ontario Home Builders’ Association, the program is already having a noticeable impact on sales.
New figures from the Ontario Home Builders’ Association (OHBA) and the Building Industry and Land Development Association (BILD) show that 8,410 new homes were sold in Ontario during the first three months of the HST reduction program. Of those, 4,765 sales were considered incremental and attributed to the HST rebate. That represents a 130 per cent increase from the same period last year, when 3,645 new homes were sold.
Scott Andison, chief executive officer of the OHBA, said the figures show the HST reduction is helping bring some activity back to a market that had been struggling.
Prime Minister Mark Carney and Ontario Premier Doug Ford announced the program on March 30, just one day before it took effect. It applies to agreements signed between April 1, 2026, and March 31, 2027, and is open to all buyers, rather than being limited to first-time buyers.
The maximum rebate is $130,000 on homes priced up to $1.5 million. The benefit is gradually reduced for more expensive homes and is eliminated at $1.85 million, with a home at that price receiving a $24,000 discount.
The two governments also announced an $8.8-billion fund in March to help municipalities reduce development charges, which are fees builders pay for infrastructure such as utilities and other services. While that program could provide more meaningful relief over the longer term, the HST reduction was the more immediate boost the industry needed.
The OHBA says the province once sold 50,000 new homes a year. In 2025, that number fell to just 14,000 total homes sold.
BILD says the early response to the HST program provides some confidence that the market is moving toward those earlier levels, with further momentum expected.
“It is incredibly positive to know that 4,765 families across Ontario were able to purchase new homes as a result of the enhanced HST rebate program,” said Justin Sherwood, Chief Operating Officer of BILD.
Sherwood said the impact of the program extends beyond home sales. Based on the additional new home sales in the second quarter of 2026, BILD estimates that during the first 3 months of the program, 17,300 construction jobs were protected, approximately $2.8 billion in GDP was preserved and about $1.4 billion in gross government revenues was maintained.
Andison also pointed out that the full benefit of the Development Charge Reduction Program (DCRP) has yet to show up in Q2 numbers.
Details of the newly introduced DCRP are only now in place, and the first announcement for the City of Toronto was on June 23rd. More details on development charge reductions in municipalities across Ontario are expected to follow.
That could provide another boost to the industry as lower costs make it easier for builders to move projects forward and get more shovels in the ground.
With new home construction having declined in recent years, there had been growing concern that Ontario could face a shortage of housing supply for several years down the road. Moffatt said the recent change could help ease some of those concerns.
“Some of those people who might’ve waited three or four years to go into the market, they’re coming into the market now, so it allows us to kind of spread out the demand a little bit,” he said.
Moffatt also suggested that if the HST program continues to perform well, he believes it could be extended beyond March 31, 2027.