Bank of Canada Rate Cuts Signal Potential Rebound in Canadian Housing Market
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RBC Economics anticipates another 50-basis-point rate cut by the Bank of Canada in December, following October’s reduction. This easing could gradually revive homebuyer activity, with RBC reporting a modest sales increase of 1.9% from August to September. According to Robert Hogue’s analysis, these rate cuts may make housing more affordable and encourage sidelined buyers to re-enter the market, marking September as the second month of consecutive sales growth.
Sellers are responding to increased demand, as listings rose by 4.9% in September, the highest monthly increase since mid-2023. This influx of new listings is pushing inventory levels back to early-pandemic figures, especially in Ontario and Toronto. Balanced conditions are emerging, with a rise in new condominium completions easing previous supply pressures in Toronto, which is helping to stabilize the sales-to-new listings ratio nationwide.
Despite these changes, property prices remain steady, with the national MLS Home Price Index barely changing month-over-month and showing a 3.3% year-over-year decline. Regional differences persist; for example, Vancouver is experiencing a buyer-friendly shift, while Calgary sees price gains due to tighter inventory. Looking ahead, RBC expects gradual rate cuts through 2025, forecasting a return to price growth but limited by affordability constraints, particularly in high-cost regions like British Columbia and Ontario.
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