Do Elections Impact the Housing Market?

The 2024 Presidential election is fast approaching. If you're considering buying or selling a home, you might be wondering how elections could affect the housing market. It's a valid concern because purchasing or selling a home is a significant decision, and it's natural to question how a major event like an election might influence your plans.

Historically, Presidential elections have had only a minor and temporary effect on the housing market. Here's a look at recent trends in home sales, prices, and mortgage rates during election periods.

Home Sales

During November in Presidential election years, there is usually a slight decline in home sales. Ali Wolf, Chief Economist at Zonda, explains:

"Typically, home sales remain steady compared to non-election years, except in November. During an election year, November tends to see slower sales than usual."

This is largely because some people feel uncertain and hesitant about making significant decisions during such a pivotal time. However, it’s important to note that this slowdown is temporary. Historically, home sales rebound in December and continue to rise in 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 11 Presidential elections, home sales increased the following year (see graph below):

The graph displays annual home sales dating back to 1978, with Presidential election years marked in blue. The year following each election is highlighted in green if existing home sales increased that year. The two orange bars indicate the only years when home sales declined 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 explains:

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

Home prices are generally resilient and tend to 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):

Similar to the previous graph, this one highlights election years in blue. The only year when home prices declined after an election is marked in orange, which occurred during the housing market crash—a highly atypical year. Today’s market conditions are quite different from back then.

All the green bars represent years when prices increased following an election. Therefore, if you’re concerned about your home losing value due to an election, you can be reassured that prices typically rise after most Presidential elections.

Mortgage Rates

Mortgage rates are crucial because they determine your monthly payments when purchasing a home. Examining the last 11 Presidential election years, data from Freddie Mac shows that mortgage rates decreased from July to November in eight of those years (see chart below):

Many predictions anticipate a slight easing of mortgage rates for the remainder of the year. If these forecasts prove accurate, this year will continue the trend of declining rates observed before most previous elections. For prospective homebuyers in the upcoming months, this could be promising news, potentially resulting in lower monthly payments due to reduced rates.

What This Means for You

So, what's the key takeaway? While Presidential elections do influence the housing market to some extent, these effects are generally minor and short-lived. As Lisa Sturtevant, Chief Economist at Bright MLS, points out:

"Historically, the housing market doesn't typically show significant differences in presidential election years compared to other years."

For most buyers and sellers, elections do not significantly alter their plans.

Bottom Line

While it's normal to feel uncertain during an election year, history demonstrates that the housing market remains strong and resilient. If you have any questions, contact a local real estate agent. They can help you navigate the market, whether it's an election year or not.