When the Bank of Canada held its overnight lending rate at 2.75 per cent in April (after six consecutive reductions beginning last summer), and then again in June, many housing and economics experts raised an eyebrow. With all the uncertainty caused by the tariff discussion with the U.S. adding to the pre-existing apprehension in the real estate market, a rate drop would have been more than welcomed news.

Wait-and-see approach

BoC thought otherwise, though, citing the need to “gain more information about both the path forward for U.S. tariffs and their impacts.”

We’re now seeing some of the effects of this decision. According to the latest Royal LePage House Price Survey and Market Forecast, the spring market – typically the busiest time of year for homebuying and selling – was subdued in several regions this year, namely in Toronto and Vancouver, two of the country’s largest and most expensive markets. Amid global political and economic uncertainty, homebuyers continued to take a cautious, wait-and-see approach, the realty firm says.

“Homebuyers approached the start of the 2025 spring market with hesitation, dampening what is typically the busiest season on the real estate calendar,” says Phil Soper, president and CEO of Royal LePage. “With trade disputes, a federal election and international conflicts dominating headlines through the first half of the year, many prospective buyers chose to wait. Yet, market fundamentals remain sound; interest is strong while activity is subdued, reflecting the uncertainty weighing on consumer sentiment. Encouragingly, June’s robust employment report may help rebuild confidence and bring more buyers off the sidelines in the months ahead.”

Encouraging signs

There are further encouraging signs. “With borrowing costs stable and inventory levels continuing to build, the foundation is in place for a stronger market this fall – and signs of renewed confidence are beginning to emerge,” adds Soper.

More locally, Toronto Regional Real Estate Board Chief Information Officer Jason Mercer says, “Additional interest rate cuts would make monthly mortgage payments more comfortable for average GTA households. This could strengthen the momentum experienced over the last few months and provide some support for selling prices.”

So, can we bank on BoC implementing a much-needed rate reduction during its next announcement on July 30? Perhaps we shouldn’t go that far, but all signs point to the likelihood. And with healthy longer term fundamentals in place, we can hope for stronger market performance beginning in the fall.