TD raised its housing sales and price forecasts. Here’s how it sees the real estate market unfolding over the next year

Strong forces may power the housing market higher in 2025.

Falling interest rates are a key driver of housing activity. The Bank of Canada has reduced its overnight lending rate by 75 basis points this year with further rate cuts expected. With inflation falling to the Bank of Canada’s 2-per-cent target in August as well as the U.S. Federal Reserve’s recent rate cut of 50 basis points, this opens the door to the Bank of Canada matching this rate cut should economic conditions deteriorate. Furthermore, the federal government’s recently announced changes to mortgage rules, raising the cap for insured mortgages and expanding the 30-year amortization period to first-time homebuyers of resale properties, could give the housing market a boost in 2025.