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

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

With the upcoming Presidential election, it's natural to speculate about potential impacts on the housing market. This uncertainty can cause anxiety if you're thinking about buying or selling a home this year. Here’s what you need to know about how the election might affect your plans and whether it’s still a good time to make a move.

Here’s some surprising news: Presidential elections usually have only a minor, short-term impact on the housing market. However, your concerns are valid, and it's important to address them so you don't feel the need to put your plans on hold.

Let's explore decades of data to see what actually happens to home sales, prices, and mortgage rates during past Presidential election cycles, so you can make an informed decision about your homeownership goals.

Home Sales

As we approach a Presidential election, particularly between October and November, it's common to see a modest dip in home sales (see the graph below):

Some buyers may choose to hold off on making a purchase decision during this time. However, it's crucial to understand that this dip is both minor and short-lived.

Historically, home sales quickly recover and often increase in the following year. According to data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR), home sales have risen after 9 of the last 11 Presidential elections, a trend that's been consistent since the early 1990s (see the chart below):

Home Prices

You might also be curious about home prices. Do they tend to drop during election years? Not usually. As a residential appraiser and housing analyst, Ryan Lundquist points out:

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

Home prices typically continue to rise over time, regardless of election cycles. Based on historical trends, you can expect the current pricing trend in your local market to persist, unless there are unusual market or economic conditions.

Recent data from the National Association of Realtors (NAR) shows that after 7 of the last 8 Presidential elections, home prices increased in the following year (see the chart below):

The one exception was from 2008 to 2009, during the peak of the housing market crash—a year that was far from typical. Today's market, however, is much more resilient. While prices are moderating on a national level, they are not experiencing an overall decline.

Mortgage Rates

Another concern you might have is mortgage rates, as they directly affect your monthly payment if you’re financing a home. According to data from Freddie Mac, in 8 of the last 11 Presidential election years, mortgage rates actually decreased between July and November (see the chart below):

This year, we've already begun to see a similar trend. Most experts are predicting that mortgage rates will gradually ease throughout the remainder of 2024. If this happens—and current indicators suggest it will—this year will continue the pattern of declining rates. For those planning to buy a home in the coming months, this could significantly enhance your purchasing power.

What This Means for You

What's the key takeaway? While Presidential elections can influence the housing market, the effects are generally minimal. As Lisa Sturtevant, Chief Economist at Bright MLS, explains:

“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

While it's natural to feel some uncertainty during an election year, history shows that the housing market remains strong 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, let's connect.