(Bloomberg) -- Canadian home prices are likely to fall twice as much as previously expected, according to economists at Toronto-Dominion Bank, as persistently high borrowing costs and an unexpected surge in listings puts more downward pressure on the market.

As recently as last month, TD’s team was predicting average home prices would decline 5% through the first quarter of 2024, a call they first made in September. They’ve now changed the forecasted drop to 10%, they said in a research note Wednesday.

The gloomier forecast comes as the highest interest rates in decades have cleared many buyers from Canada’s housing market, while putting more pressure on mortgage holders. The result has been an increase in the number of homes up for sale since the middle of the year, and a slide in benchmark home prices since September.

Persistently high inflation has caused TD to hike its forecast for bond yields. As that translates into still-higher fixed mortgage rates, more prospective buyers could be squeezed out. Those who remain, will have more negotiating power because of the surge in new listings.

In Ontario, the country’s most populous province, for instance, TD found one measure of supply and demand, the sales-to-new listings ratio, had fallen to 39% in October from 63% in May, indicating more pressure on prices could come.

The economists said, however, that even the greater-than-expected price decline would still leave Canada’s average home prices 15% higher than pre-pandemic levels. And with the TD economists — and the broader market — forecasting the Bank of Canada will begin cutting interest rates by the middle of next year, they say that should prevent steeper declines.

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