What Does 'Months of Supply' Mean in Real Estate?

Months of supply — sometimes called months of inventory — is a measure of how long it would take to sell all currently active listings at the current pace of sales, assuming no new listings enter the market.

It's calculated by dividing the number of active listings by the number of sales in a given month:

Active listings ÷ Monthly sales = Months of supply

Example: If there are 10,000 active listings in Toronto and 2,000 homes sold last month, there are 5 months of supply.

How to Interpret It

Months of supply is one of the most useful single-number summaries of market conditions:

• Under 3 months: Seller's market. Demand exceeds supply. Prices tend to rise. Multiple offers are common on well-priced properties. Buyers have less negotiating power.
• 3–6 months: Balanced market. Neither buyers nor sellers have a structural advantage. Prices tend to be stable.
• Over 6 months: Buyer's market. More supply than demand. Buyers have negotiating leverage. Properties sit longer. Sellers may need to price more aggressively or make concessions.

These are general thresholds — the specific dynamics in Toronto's condo market versus freehold market versus suburban market vary considerably, and months of supply should always be read in context.

Why It Matters Right Now

As of early 2026, Toronto's overall residential market is sitting at approximately 5 months of supply. The condo segment specifically is closer to 6–7 months in some building categories — firmly in buyer's market territory for condos. The freehold segment in established neighbourhoods is tighter, particularly for well-priced semis and detached in areas like Leslieville, Roncesvalles, and the Danforth.

Months of supply explains why you might see multiple offers on a Roncesvalles semi while a condo in a high-supply building sits for 90 days. The macro number masks the micro reality: different property types and neighbourhoods are in different markets simultaneously.

Limitations

Months of supply is a snapshot, not a forecast. It tells you where the market is right now — not where it's going. A sudden influx of new listings or a change in buyer activity can shift the number significantly from one month to the next.

It also doesn't account for the quality or pricing of active listings. A market with 8 months of supply could include a significant share of overpriced or problematic listings that won't sell at any reasonable price — making the market feel tighter than the number suggests for well-priced properties.

Use it as one data point among several, not as a standalone decision-making tool.