Why Small Rate Cuts Barely Move Toronto Housing: Canada's Neutral Rate Range

As of mid-September 2025, Canada's policy interest rate sat inside the neutral range, roughly 2.25% to 3.25%. That is the main reason a 25 basis point cut at the Bank of Canada's September 17, 2025 meeting was unlikely to move Toronto house prices much. The fall market was being decided by inventory and sales counts, not by a quarter of a point.

I am Moe Asgarian, a real-estate broker in Toronto, and this is the market review I was giving clients as the fall 2025 season opened. Five factors mattered more than the rate headline.

What the Neutral Rate Range Is and Why It Mattered in 2025

A neutral rate is one that neither stimulates nor restrains the economy. In 2025, Canada's neutral band was estimated at about 2.25% to 3.25%, and in mid-September 2025 the policy rate was sitting in the middle of it. Inside that band a 25 basis point move is a nudge. That is a very different thing from the moves made when rates were far above the band.

The September 17, 2025 Bank of Canada meeting drew most of the media attention, and the US Federal Reserve happened to meet the same day. Both affect fixed and variable mortgage rates in Canada. Canadian employment data going into that week had been poor. Even so, if you were holding your home off the market waiting for a mid-September 2025 rate cut to lift prices, I did not think that was going to happen. Forecasts at the time pointed to no sharp move in prices, up or down, before the end of 2025. We are talking about trends, and anything can happen, but in that economy and that labour market a quarter point was not the deciding factor. Over the fall of 2025 the Canada and United States trade dispute still looked like the biggest single influence on housing.

Sales Volume Was the Number to Watch

Through 2025 the pattern in both freehold and condo was the same: plenty of homes on the market and sales that were nothing to be proud of. The exception was Toronto condo sales, which rose month over month and set a record in July 2025. Read sales counts carefully and look at direction rather than level. Rising sales would be the first real sign of the market coming back. In mid-September 2025 it was too early to call, and that was exactly the trend worth tracking week by week.

The Listings That Left the Market in July and August 2025

Statistics showed a large number of properties coming off the market in July and August 2025, and this time they left for good. Earlier in 2025 an unsold home was usually pulled for a short period, changed slightly and put back, so real inventory never moved. Over the summer of 2025 I watched many sellers take a home off and not come back.

The reasons varied. Plenty of owners decided not to sell at all and to rent the place out instead. Others living in the home chose to stay put until the market looked better. A third group was simply waiting to use the fall season. So the thing to track is which homes that sat on the market earlier in 2025 came off and then returned in the fall. My sense was that the second round of pricing would be more reasonable, and that a good home could be bought at those prices.

Where Prices Were Heading in Late 2025

The condo market was the critical one. Prices had come down almost everywhere by the fall of 2025, but freehold, and detached in particular, had not dropped nearly as much. My prediction in September 2025 was straightforward. If a wave of listings came back over late 2025 and sales did not pick up, prices were set to keep sliding by around 1.5% a month.

For scale, the average home price fell by roughly $150,000 between the February 2022 peak and July 2025. I am not telling anyone to rush. I am saying that a decline of that size creates openings, and they are worth looking at.

Months of Inventory Across the GTA in September 2025

The number I come back to every time is months of inventory. For any segment of the market it tells you where that segment is going. At 7 or 8 months, conditions strongly favour buyers. At 1 month or below, it is a seller's paradise. The figures update constantly, but in mid-September 2025 the approximate readings were 3 months for semi-detached, about 5 for detached, above 5 for townhouses and 7 for condos. With those four numbers you can read the fall market yourself.

Buyers, Sellers and Builders Going Into Fall 2025

My own observation in September 2025 was that first-time buyers were coming back, which makes sense in a buyer's market, especially for condos. I was not saying that any particular day was the best day of the year to buy. Prices were still easing and a condo bought three months later might cost less. But an active buyer in the fall of 2025 could find strong condos arriving at good prices, and the best of them get taken by someone else and are hard to replace.

For builders and anyone funding one, Canadian housing construction held up better than sales did. Official reports in July 2025 put the annual pace of housing starts up 4%, and starts over the first seven months of 2025 were above 2024 levels, so builders were still active. Many of them faced higher costs, expensive financing and tariff uncertainty. One thing I saw in practice is that the US tariffs raised building material prices more inside the United States than in Canada. The real drag on the industry was the drop in sales volume.

If you want to go through your own plans for the season ahead, whether you are buying, selling or building, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.