What's the Impact of Presidential Elections on the Housing Market?

What's the Impact of Presidential Elections on the Housing Market?

It's understandable if the upcoming Presidential election has you wondering about the future. Those uncertainties can quickly lead to worry and doubt. If you're thinking about buying or selling a home this year, you might be wondering how the election could affect the housing market and whether it's still a good time to proceed.

Here's some reassuring news: Presidential elections generally have only a minor and short-lived impact on the housing market. Your concerns are valid, and it's important to have the right information so you can make informed decisions without having to delay your plans.

To help you navigate this, we’ve analyzed data from previous Presidential election cycles, showing how home sales, prices, and mortgage rates have behaved in the past. This information will help you move forward with confidence as you consider your homeownership options.

Home Sales

In the month before a Presidential election, from October to November, home sales usually experience a minor dip (refer to the graph below):

Some buyers might choose to delay their decisions until after the election. However, it's crucial to understand that this slowdown is minor and short-lived.

Historically, home sales tend to recover quickly and even increase in the following year.

In fact, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) reveals that after 9 of the last 11 Presidential elections, home sales have risen in the year following the election. This trend has been consistent since the early 1990s (see chart below).

Home Prices

You might also be curious about home prices. Do they tend to drop during election years? Generally, they do not. According to residential appraiser and housing analyst Ryan Lundquist:

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

Home prices typically increase over time, regardless of election cycles. Historical trends suggest that the current pricing patterns in your local market are likely to persist, unless unusual market or economic conditions arise.

Recent data from the National Association of Realtors (NAR) indicates that after 7 of the last 8 Presidential elections, home prices have risen in the year following the election (see chart below).

The exception was during 2008 to 2009, a period marked by the peak of the housing market crash, which was far from typical. Today's market, however, is much more robust. Although national prices are moderating, they are not experiencing an overall decline.

Mortgage Rates

Another concern you might have is mortgage rates, as they affect your monthly payment if you're financing a home. Data from Freddie Mac shows that in 8 of the last 11 Presidential election years, mortgage rates decreased from July to November (see chart below):

This year, we’ve already begun to see a similar trend. Most experts also predict that mortgage rates will decrease slightly for the remainder of 2024. If this forecast proves accurate, we can expect the trend of declining rates to continue. For those planning to buy a home in the near future, this could positively impact your purchasing power.

What This Means for You

What’s the key takeaway? Although Presidential elections do influence the housing market to some extent, the effects are generally minimal. As Lisa Sturtevant, Chief Economist at Bright MLS, puts it:

“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 significantly affect their plans.

Bottom Line

It’s normal to feel some uncertainty during an election year, but history demonstrates that the housing market remains robust and resilient. This means you don't need to put your plans on hold. If you need assistance navigating the market during this election cycle, feel free to reach out.