How Presidential Elections Influence the Housing Market: What the Data Reveals

How Presidential Elections Impact the Housing Market

As we approach another presidential election year, it's natural to wonder how the outcome might influence various aspects of our lives, including the real estate market. While some might anticipate dramatic shifts, historical data suggests that the housing market remains relatively stable during election years. Let’s dive into the data to understand how the market has reacted in the past.

1. Home Sales Trends

According to data from the U.S. Annual Existing Home Sales, home sales have shown a consistent trend of increasing after the majority of recent presidential elections. Specifically, home sales increased after 9 out of the last 11 elections. While there tends to be a slight slowdown in November during election years, the market often rebounds quickly and continues to grow in the following year. This trend suggests that any temporary hesitation from buyers and sellers during the election season is typically short-lived, and confidence in the housing market remains strong.

2. Mortgage Rate Movements

Mortgage rates also play a critical role in the real estate market, especially during election years. Historical data reveals that mortgage rates have decreased in the lead-up to 8 of the last 11 presidential elections. For example, in 2020, the mortgage rate dropped from 3.02% in July to 2.77% by November, a difference of -0.25%. This trend of slightly declining rates can provide an added incentive for buyers, as lower rates make purchasing a home more affordable.

3. Home Prices Stability

Home prices have also shown resilience during election years. Data from the U.S. Annual Median Sales Price of Existing Single-Family Houses Sold indicates that home prices went up after 7 of the last 8 presidential elections. This upward trend suggests that home prices typically follow the broader market's direction, continuing to rise regardless of the political climate.

4. Market Reactions Are Generally Steady

Lisa Sturtevant, Chief Economist at Bright MLS, emphasizes that the housing market doesn’t tend to look very different in presidential election years compared to other years. This insight aligns with the data, reinforcing the idea that while elections might cause some short-term uncertainty, they do not significantly disrupt long-term housing market trends.

Conclusion

While presidential elections can bring uncertainty to many areas of life, the housing market has historically shown resilience and stability. Home sales, mortgage rates, and home prices tend to follow their usual patterns, with any election-related dips being temporary and often followed by growth in the subsequent year. If you're considering buying or selling a home during an election year, these trends suggest that the market will continue to offer opportunities, regardless of political outcomes.

For more insights on how current events may impact your real estate decisions, feel free to reach out to me or visit my website, JesseRottinghaus.com. Whether you're buying, selling, or investing, I’m here to help you navigate the market with confidence.