The 2024 Presidential election is approaching quickly. If you’re considering buying or selling a home, you might be wondering how elections might influence the housing market.
It’s a valid concern since buying or selling a home is a significant decision, and it’s natural to question how such a major event could impact your plans.
Historically, Presidential elections have only had a minor, temporary effect on the housing market. Here’s an update on what typically happens to home sales, prices, and mortgage rates during election periods.
Home Sales
In November of election years, there’s often a slight dip in home sales. As 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 dip is primarily due to uncertainty, making some people hesitant to make significant decisions during such times. However, this slowdown is brief. Historically, home sales rebound in December and continue to increase the following year.
Data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) indicates that after nine of the last 11 Presidential elections, home sales rose the next year.
The graph depicts annual home sales from 1978 onward. Years with a Presidential election are marked in blue. The year following each election is shown in green if existing home sales increased. The two orange bars highlight the only years when home sales declined after an election.
Home Prices
What about home prices? Do they fall during election years? Not usually. According to Ryan Lundquist, a residential appraiser and housing analyst:
“An election year doesn’t alter the price trend that is already happening in the market.”
Home prices are generally resilient, typically increasing year-over-year, regardless of elections. The latest NAR data shows that after seven of the last eight Presidential elections, home prices rose the following year.
The only exception was during the housing market crash, an atypical year. The current market is much different than it was back then.
Mortgage Rates
Mortgage rates significantly impact your monthly payment when buying a home. Reviewing the last 11 Presidential election years, Freddie Mac data shows mortgage rates dropped from July to November in eight of those years.
Most forecasts predict a slight decline in mortgage rates for the remainder of the year, which aligns with the trend of declining rates before previous elections. If you plan to buy a home soon, this could be beneficial, as lower rates mean lower monthly payments.
What This Means for You
What’s the key takeaway? While Presidential elections do have some impact on the housing market, the effects are typically minor and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, states:
“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.
While it’s normal to feel a bit uncertain during an election year, history shows that the housing market remains strong and resilient. If you have questions, reach out to a member of our team. We can help you navigate the market, election year or not.