Rate cuts boost housing demand faster than supply, BoC research finds

Drawing on over two decades of consulting experience and a deep background in business analysis, I’ve observed firsthand how interest rate cuts have a pronounced, immediate effect on home sales, while new construction tends to lag behind. Recent Bank of Canada research confirms this: when rates drop, demand for homes rises quickly, but the supply side—new builds and developments—takes longer to catch up. This mismatch leads to persistent price increases and ongoing affordability challenges, especially in times of low unemployment. The data suggests that while monetary policy can stimulate activity, policies focused directly on boosting supply might offer a more effective path to balancing our housing market.