Canadian Housing Market Set for Rebound in 2025 but Trade Uncertainty Looms

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The Canada Mortgage and Housing Corporation (CMHC) anticipates a rebound in Canadian home sales and prices in 2025, driven by improved borrowing conditions following recent interest rate cuts by the Bank of Canada. The central bank has reduced its benchmark interest rate to 3% to stimulate the economy and support the housing market. This monetary easing is expected to encourage homebuyers to re-enter the market, leading to increased sales and a modest rise in home prices.

However, the outlook is clouded by potential trade tensions with the United States. The U.S. has proposed tariffs of up to 25% on Canadian goods, which could have significant economic repercussions. The Bank of Canada warns that such trade conflicts may lead to weaker growth and higher inflation, potentially impacting consumer confidence and the housing market's recovery.

Despite these challenges, the CMHC remains cautiously optimistic. While the number of new homes under construction is projected to decline over the next few years, it is expected to remain above the 10-year average. Additionally, rental affordability may improve due to anticipated higher vacancy rates. Nevertheless, factors such as labor shortages, supply chain issues, and potential changes in immigration policies could influence the housing market's trajectory.

Read the full article on: BNN Bloomberg