After a year marked by caution and shifting expectations spurred by rising borrowing costs, economists believe the Canadian housing market could be in for a rebound in 2024.

That鈥檚 largely dependent on forecasts that the Bank of Canada could begin cutting its key interest rate from the current level of five per cent as early as the second quarter of this year.

鈥淲e鈥檙e obviously watching for a turning point in the market,鈥� said TD Bank economist Rishi Sondhi.

鈥淲e鈥檝e had some, I would say, weaker sales and price activity over the past few months 鈥� We鈥檙e getting some indications that the market, at least from a demand perspective, is starting to turn around.鈥�

In its latest report on national home sales and pricing data, the Canadian Real Estate Association said there have been softer market conditions since the end of last summer, with sellers joining potential buyers on the sidelines.

While price declines have mainly been an Ontario 91原创enon as of late, home prices were also starting to soften late in the year in the Fraser Valley, Winnipeg and Halifax. Elsewhere, prices were mostly holding firm or continuing to climb in provinces such as Alberta, Saskatchewan, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

鈥淚 wouldn鈥檛 expect anything too headline-grabbing from the resale housing market for the next few months,鈥� noted CREA chair Larry Cerqua in December.

鈥淭hat鈥檚 a good thing, because a market that looks to be stabilizing in balanced territory increasingly suggests the soft-landing scenario.鈥�

In Vancouver, realtor Tim Hill with Re/Max All Points Realty said he鈥檚 optimistic as sentiment among his clients has slowly shifted thanks to modest price improvements in recent months.

鈥淲e鈥檙e still riding some rocky seas, right?鈥� he said.

鈥淚 think that we鈥檙e going to see consumer confidence increase, at least partially, probably by quarter two realistically. But I think we鈥檙e going to start seeing people talking about making those moves again for 2024.鈥�

The Bank of Canada has held rates steady over three rounds of decisions as inflation continued to moderate, but the central bank has said it could still raise rates even as forecasters widely expect the next move to be a cut.

Sondhi acknowledged that risk, should inflation remain 鈥渕ore stubbornly elevated than anticipated鈥� in the coming months.

鈥淭hen the bank might be forced to, at the very least, maintain a higher-for-longer stance,鈥� he said.

The interest rate story is one of many unknowns lingering after the calendar flipped to the new year, said RBC assistant chief economist Nathan Janzen. While all eyes are on the central bank, Janzen is also watching the labour market, which he said has continued to weaken.

鈥淚t鈥檚 not surprising against that backdrop to seeing housing activity softening, late last year as well,鈥� Janzen said.

鈥淲e have housing activity remaining fairly sluggish to start 2024, but inflation has also been slowing. What that means is the Bank of Canada is getting closer to the point where they can start taking their feet off the monetary policy brakes of the economy and inch closer to a pivot to interest rate cuts.鈥�

That could bring more activity and 鈥渟mall increases in prices鈥� over the second half of the year, as he forecasts home prices moving 鈥済radually higher鈥� across all markets.

Janzen said he doesn鈥檛 see a rapid recovery in the cards even once the cycle of rate cuts begins, since that process will likely be slower in the early stages than the hiking cycle seen last year.

But any rate cut will 鈥渟pur excitement and activity,鈥� said Toronto real estate agent Anne Marie Lorusso with Freeman Real Estate Ltd.

鈥淓ven the people that are not quite ready are going to hope that the next interest rates will tick down again,鈥� she said.

鈥淚鈥檓 in the camp that says I think the spring market is going to be good. Sellers will be excited and will hold on to their prices and buyers are going to have to figure out what they can get for their money.鈥�

But Hill said the potential rush in late 2024 is why he鈥檚 advising clients not to delay, even though borrowing costs are still high right now.

鈥淢y cautionary tale for my clients right now is let鈥檚 not wait to do what everybody else will do,鈥� he said.

鈥淲hen our markets switch, it鈥檚 like the tap just reopens and then everybody comes running. The issue there is now all of our buyers are competing against each other again and they seem to come hot and fast too. It feels like the Wild West.鈥�

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