The Presidential Election ‘Bounce Back Effect‘

The Presidential Election ‘Bounce Back Effect‘

Each year, home sales naturally ease up a bit in the fall but during an election year, the slowdown tends to be a bit more pronounced. This year, nearly 23% of first-time buyers are hitting pause until after the election, likely waiting for a clearer view of what’s ahead.

Historical Market Responses:

Home Sales: Home sales typically rebound quickly. With the political uncertainties in the rearview, both buyers and sellers regain confidence, fueling a more active market. Data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) show that home sales increased the year following 9 of the past 11 presidential elections — a trend consistently observed since the early 1990s.

Home Prices:  According to NAR, home prices have risen 88% of the time in the year following an election. The only year prices declined was during the housing market crash of 2008, which was far from a typical year. Nationally, home prices are predicted to continue to increase in 2025.

Mortgage Rates:  Freddie Mac data indicates that mortgage rates typically dropped between July and November in 8 of the last 11 presidential election years. While this year hasn’t followed that trend, most experts still expect a gradual decrease by year’s end.

Ralph’s Take

Presidential elections bring a brief, minor slowdown to the housing market. While they can prompt a short-term pause, those sales aren’t lost. Home sales generally rise the following year and 2025 is expected to follow suit. For those waiting for a clearer outlook, keep in mind that mortgage rates ultimately having a greater impact on the market than election results.