Fact or Fiction: How Presidential Elections Influence the Housing Market

As the Presidential election draws near, many find themselves pondering the potential impact on the housing market. It's natural to feel uncertain during such times, especially if you're considering buying or selling a home. The good news is that historical data suggests Presidential elections typically have only a minor and temporary effect on the real estate market. Let's dive into the details to understand what this means for you.

Do Elections Really Affect Home Sales?

One of the most common concerns is whether home sales slow down during an election year. The truth is, there’s usually a slight dip in home sales in the months leading up to the election, particularly from October to November. This is likely due to some buyers and sellers adopting a "wait and see" approach as they anticipate the election's outcome.

However, this slowdown is typically brief. Historical data from the National Association of Realtors (NAR) and the Department of Housing and Urban Development (HUD) shows that after 9 out of the last 11 Presidential elections, home sales rebounded and increased the following year. This consistent trend suggests that any hesitation is temporary, and the market quickly returns to its usual activity.

In the month leading up to a Presidential election, from October to November, there’s typically a slight slowdown in home sales (see graph below):

Are Home Prices Affected During Election Years?

Another key question is whether home prices tend to drop during election years. According to historical trends, the answer is no. Home prices generally follow the broader market trends rather than being significantly influenced by the election cycle. As residential appraiser Ryan Lundquist points out:

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

In fact, data from NAR indicates that after 7 out of the last 8 Presidential elections, home prices increased in the following year. The only exception was during the 2008-2009 period, which was marked by the housing market crash—a scenario far different from typical election years.

In fact, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows after 9 of the last 11 Presidential elections, home sales went up the year after the election, and it’s been happening consistently since the early 1990s (see chart below):

The latest data from NAR reveals that after 7 of the last 8 Presidential elections, home prices increased the following year (see chart below):

The one outlier was from 2008 to 2009, which was during the height of the housing market crash. That was certainly not a typical year. Today’s market, however, is much more resilient. And while prices are moderating nationally, they aren’t on an overall decline.

The Impact on Mortgage Rates

Mortgage rates are another area of concern during election years, as they directly affect your financing options. Historical data from Freddie Mac shows that in 8 out of the last 11 Presidential election years, mortgage rates decreased from July to November.

This year, we’re already seeing a similar pattern. Many experts predict that mortgage rates will continue to decline throughout the rest of 2024, which could be great news for buyers looking to secure favorable financing terms.

What Does This Mean for You?

The bottom line is that while Presidential elections can cause some short-term uncertainty, they usually have minimal long-term impact on the housing market. As Lisa Sturtevant, Chief Economist at Bright MLS, says:

“Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.”

For most buyers and sellers, there’s no need to put your plans on hold because of an election.

Conclusion

While it’s natural to feel cautious during an election year, history shows that the housing market remains resilient. If you’re considering buying, selling, or investing in real estate, there’s no reason to delay your plans.

Ready to take the next step? Contact David Smith, team leader of Blok & Blvd. Realty at Compass Real Estate. With over 21 years of experience in the Houston real estate market, I’m here to guide you through any uncertainties and help you make informed decisions. Reach out to me at 281-732-3090 or david@blokblved.com. Let’s work together to achieve your real estate goals, no matter what the election year brings.