Home sales in the Toronto region dropped 5.3% in August from a year earlier and average home prices edged slightly lower compared to August 2023. Money markets are pricing in an almost 100% chance of another 25-basis point cut in October, followed by a cut in December. The Bank of Canada’s decision to lower its key lending rate was motivated by continued progress on inflation and the need for economic growth to pick up again. Lower interest rates will lead to a further improvement in affordability, especially for those using variable rate mortgages. First-time buyers are especially sensitive to changes in borrowing costs. As mortgage rates trend lower this year and next, we should experience an uptick in first-time buying activity, including in the condo market. Even as demand picks up, especially in 2025, it will take time for the inventory of listings to be absorbed. Ample choice in the market will help keep price growth moderate, at least in the initial phases of recovery.