The first interest rate cut for Canada this year could come as soon as this spring, according to Marc Ercolao and TD Economics.

After a year where interest rates skyrocketed at a pace not seen in decades, economists have said that the Bank of Canada's (BoC) focus is now moving toward rate cuts, which has implications for the country's housing market.

In an analysis note, Ercolao, an economist at TD Bank, wrote that preliminary housing market data for December pointed to strong sales activity and declining listings as well as tightening conditions in major markets.

"The greater-than-expected drop in yields, and subsequently mortgage rates, in the fourth quarter partially explains this uptick in activity," he wrote.

"The BoC will be watching the housing market as seasonally strong spring homebuying will fall directly in line with the expected timing of interest rate easing."

Ercolao added that the next inflation release, due out on January 17, might see inflation accelerate on the back of base effects that saw weak inflation a year ago.

"However, inflation is trending in the right direction, and we forecast it will durably break below the 3 per cent level in 2024," he wrote.

Home prices will continue to climb: Royal LePage

According to a report released in mid-December by Royal LePage, Canadians can expect to see a 5.5 per cent increase in prices towards the end of this year when compared with prices in 2023.

The Canadian real estate franchiser predicted the national average for a typical home to be $843,684 in 2024.

Its forecast is based on a prediction that the Bank of Canada has concluded its interest rate hike campaign and that the key lending rate will hold steady at 5 per cent through the first half of 2024.

According to Royal LePage, the central bank is expected to start making modest cuts in late summer or fall of next year.

That prediction differs from Ercolao's, who says markets are pricing the first rate cut to occur at the BoC's April meeting.