Do Elections Impact the Housing Market?

With the 2024 Presidential election on the horizon, potential home buyers and sellers are understandably curious about how such a major event might influence the housing market. It's a crucial consideration, as buying or selling a home is a significant decision.

Historically, Presidential elections have had only a minor, temporary effect on the housing market. Here’s a closer look at how home sales, prices, and mortgage rates have responded to elections in the past.

Home Sales

Typically, during Presidential election years, there's a slight dip in home sales in November. Ali Wolf, Chief Economist at Zonda, notes:

"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 slowdown is often due to the uncertainty and hesitation some people feel about making large decisions during an election period. However, this slowdown is temporary. Historical data shows that home sales tend to bounce back in December and continue to rise in the following year.

For instance, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) reveals that after nine of the last eleven Presidential elections, home sales increased the next year.(see graph below):

Home Prices

When it comes to home prices, election years don’t typically disrupt the ongoing price trends. Ryan Lundquist, a residential appraiser and housing analyst, explains:

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

Home prices generally continue to rise year-over-year, regardless of elections. Recent data from NAR shows that after seven of the last eight Presidential elections, home prices increased the following year. The only exception was during the housing market crash, which was an atypical year.(see graph below):

Mortgage Rates

Mortgage rates significantly affect monthly payments for home buyers. Data from Freddie Mac shows that in eight of the last eleven Presidential election years, mortgage rates decreased from July to November.(see chart below):

Current forecasts suggest that mortgage rates might ease slightly throughout the remainder of this year, potentially continuing the trend of declining rates seen in most previous election years. For those looking to buy a home, lower rates could result in a more affordable monthly payment.

What This Means for You

The key takeaway is that while Presidential elections do have some impact on the housing market, these effects are usually minor and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, summarizes:

"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 impact their plans.

Bottom Line

It's natural to feel uncertain during an election year, but history shows that the housing market remains strong and resilient. Whether you're buying or selling, it's essential to stay informed and work with a knowledgeable real estate professional to navigate the market effectively.

6-17-2024