Do Elections Impact the Housing Market?

Do Elections Impact the Housing Market?

The 2024 Presidential election is just months away. As someone considering buying or selling a home, you might be curious about the potential effects of elections on the housing market.

This is a valid concern because buying or selling a home is a major decision, and it’s natural to wonder how such a significant event might impact your plans.

Historically, Presidential elections have had only a small, temporary impact on the housing market. Here’s the latest on what has happened to home sales, prices, and mortgage rates during those times.

Home Sales

During November in Presidential election years, there’s typically a slight slowdown in home sales. As Ali Wolf, Chief Economist at Zonda, explains:

“Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal.”

This is mostly because some people feel uncertain and hesitant about making big decisions during such a pivotal time. However, it’s important to know this slowdown is temporary. Historically, home sales bounce back in December and continue to rise the following year.

In fact, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows that after nine of the last eleven Presidential elections, home sales increased the following year (see graph below):

The graph shows annual home sales dating back to 1978. Each year with a Presidential election is marked in blue. The year immediately following each election is highlighted in green if existing home sales increased that year. The two orange bars represent the only years when home sales decreased after an election.

Home Prices

What about home prices? Do they drop during election years? Not typically. As residential appraiser and housing analyst Ryan Lundquist puts it:

“An election year doesn’t alter the price trend that is already happening in the market.”

Home prices are quite resilient. They generally rise year-over-year, regardless of elections. The latest data from NAR shows that after seven of the last eight Presidential elections, home prices increased the following year (see graph below):

Just like the previous graph, this one shows election years in blue. The only year when prices declined after an election is marked in orange, which was during the housing market crash—a period far from typical. Today’s market is different than it was back then.

All the green bars represent years when prices rose following an election. So, if you're worried about your home losing value because of an election, you can rest easy knowing that prices generally rise after most Presidential elections.

Mortgage Rates

Mortgage rates are important because they affect how much your monthly payment will be when you buy a home. Looking at the last eleven Presidential election years, data from Freddie Mac shows mortgage rates decreased from July to November in eight of them (see chart below):

Most forecasts expect mortgage rates to ease slightly throughout the remainder of the year. If they’re correct, this year will follow the trend of declining rates leading up to most previous elections. For those looking to buy a home in the coming months, this could be good news, as lower rates could mean a lower monthly payment.

What This Means for You

So, what’s the big takeaway? While Presidential elections do have some impact on the housing market, the effects are usually small and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, says:

“Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.”

For most buyers and sellers, elections don’t have a major impact on their plans.

Bottom Line