Ontario home sales are projected to rise by nearly 10% in 2025, driven by pent-up demand from buyers awaiting further interest rate cuts. This could lead to significant momentum starting in the spring or summer of next year.

The Canadian Real Estate Association (CREA) forecasts a more stable real estate market in 2025 following a slow 2023 and 2024.

Ontario’s annual sales declined by over 12.3% in 2023, followed by a slight 1.5% increase this year. With a 9.9% sales jump anticipated in 2025, the market is expected to return to levels seen in previous years. Home prices are also expected to grow modestly by 2.4%.

The Bank of Canada cut its key interest rate by 0.25 percentage points in June, July, and September, lowering the rate from 5% to 4.25%. Economists are predicting an additional 0.5% reduction when the next rate announcement is made on October 23rd.

However, CREA revised its housing market forecast for the remainder of this year, noting that the interest rate cuts haven’t sparked the gradual recovery initially expected.

“Sales have increased for three consecutive months following the interest rate cuts, showing a trend, though not a dramatic one,” said Shaun Cathcart, CREA’s senior economist.

With the pace of rate cuts now expected to be much faster than previously thought, it’s possible some buyers may choose to hold off on a purchase for now. This could further boost the rebound expected in 2025 at the expense of the last few months of this year.

In early September, a surge in new listings provided buyers with more choices before the market typically slows down for the balance of the year.

While some buyers may choose to take advantage, others may be inclined to wait, as more substantial rate cuts from the Bank of Canada are now expected to show up in a matter of months as opposed to years. That being said prices will rise with more interest rate cuts and we could see an active and vibrant spring market on the horizon.