Does an Election Year Impact the Housing Market?

Every four years, Americans vote for who they want to be the next U.S. president. As the election nears, some homebuyers and sellers may adopt a cautious approach to the market, while others seize opportunities based on anticipated policy shifts. 

Read on to learn how these market dynamics could impact the broader housing market so you can make more informed investment decisions. 

Impact of Past Elections on the U.S. Housing Market

Before diving into election years’ potential impact on the housing market, it’s important to note that historically, it has been relatively indiscernible. 

According to John Burns Research and Consulting (JBREC), “The annual seasonal decline in home sales is no worse in election years than in non-election years, according to 35 years of data.”

Furthermore, data from the S&P CoreLogic Case-Shiller Home Price Index shows that since 1987, home prices have climbed 4.84% in election years compared to 4.44% in non-election years. However, the outlier years driving this percentage difference are better attributed to external factors, such as the 2008 financial crisis and the housing bubble leading up to it.

In short, if you’re going off history, don’t expect a significant change to U.S. home sales or values in an election year—at least not due to the election itself.

Does Election Uncertainty Cause Americans to Put Off Homebuying?

That said, there’s a common perception that home sales slow down in the months leading up to election day as buyers wait to see who will be president and, by extension, what types of economic and housing policies will be pushed. 

According to a recent survey conducted by Veterans United Home Loans, roughly 38% of 930 respondents (which include veterans and civilians) indicated that they plan to wait until after the election to continue their home search. Their concerns included inflation, housing affordability, the job market, taxes, and national security.

Of course, the president doesn’t control each of these issues. However, they can help shape policy with their veto power, executive orders, and public influence—which may explain why some prospective homebuyers choose to delay their purchase.

Americans' Top Economic and Housing Concerns in 2024

This year, many Americans are uncertain or skeptical about the U.S. economy, especially the home market.

According to the most recent consumer confidence metrics, U.S. consumers are “relatively confident about the labor market” but “still appear to be concerned about elevated prices and interest rates, and uncertainty about the future.”

Meanwhile, the latest national housing survey by Fannie Mae shows that 81% of consumers say it’s a bad time to buy a house, 45% expect home prices to go up in the next 12 months, and only 24% expect mortgage rates to go down in the next 12 months.

The poor consumer sentiment reflects a challenging housing market that has seen existing homes for sale drop to an annual rate of 3.89 million, median home prices rise to $426,900, and average 30-year fixed mortgage rates hover around 7%, leaving housing affordability at a three-decade low.

That said, the Fed Chair—whom the president can appoint (and technically fire) but not control—recently signaled a potential interest rate cut in September, which could provide some relief to homebuyers and motivate homeowners with low rates to sell. However, it’s unlikely to solve the overall housing shortage.

Understanding the Broader Picture

Ultimately, the U.S. president has limited control over the country’s economy and housing market, though they still have some influence. 

As a real estate professional, this means you may see temporary market fluctuations leading up to the election as some Americans wait to see what type of administration will be leading the country. 

Additionally, you may have your own predictions of who will win the election and adapt your business strategy accordingly. 

Whatever you do, remember that election years have relatively little impact on the housing market overall. It is much more influenced by broader economic and demographic trends, such as mortgage rates, housing supply, and population growth.