Conventional wisdom has held that the housing market slows in the months leading up to a presidential election. However, data over the past three decades show that there’s no notable impact on the housing market in election years.
Could this year be different? So far, the 2024 presidential election cycle has been unusual by many measures. In addition to the atypical campaign season, housing affordability is at an all-time low, and housing is a major factor on voter’s minds in a way not seen in prior presidential election years.
The housing market doesn’t look particularly different during presidential election years. There’s a widely accepted theory that people hold back on buying a home leading up to a presidential election. However, data reveal no evidence of a slowdown in market activity during election years. While home sales almost always decline seasonally between October and November, it doesn’t seem to make a difference if we’re voting for president or not. According to monthly home sales data from the National Association of REALTORS®, in the years without a presidential election, sales were down an average of 9.8% in November compared to 9.4% in presidential election years.
Looking at S&P CoreLogic Case-Shiller data back to 1988, there’s no evidence that the presidential election has a particular impact on home prices. Prices rose an average of 4.5% during the fall of non-election years compared to 4.4% in years with a presidential election.
Mortgage rates are more important than the election. Homebuyers and sellers are more influenced by macroeconomic factors than political factors. What the Federal Reserve does in the weeks leading up to the election will be a more influential factor on the housing market than the election itself.
The Fed wants to make it clear that monetary policy decisions are separate from politics. To some, that has meant shying away from any movement on interest rates leading up to the election. But looking back at the timing of Fed interest rate decisions, they don’t seem to hold back on raising or lowering rates in presidential election years. This year will be no different, and we should expect a rate cut when the Fed meets in September.
But there are ways in which this election could be different. It’s possible that data from past election years may not be a good predictor of what will happen this year. The current presidential election cycle is anything but typical. There are at least two ways in which this year’s election could cool housing market activity leading up to November.
First, high-income homebuyers may be more likely to take a cautious approach. In many areas, the luxury market has been outperforming the overall market, and a pull-back in high-end sales could show up as slower overall housing market activity.
It’s also possible that some people are worried about potential chaos post-election. After the events that followed the 2020 election, there are fears that there could be a repeat. The markets don’t like uncertainty, and people are less likely to make big decisions amidst turbulence.
In the short term, the best thing for the housing market—in addition to interest rate cuts—is for the presidential election to proceed in a decisive and orderly fashion.
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