With the 2024 presidential election around the corner, you may be wondering how it might affect the housing market. Let’s break it down.
Election Years Often Cause a Brief Market Pause
Typically, home sales experience a slight seasonal slowdown in the fall. However, data from BTIG shows that in election years, this dip tends to be a bit more pronounced in the month leading up to Election Day (see graph below).
The reason? Uncertainty. Many consumers pause on major decisions or purchases, opting to wait and see how the election unfolds. This pattern consistently affects buyer and seller activity in the housing market.
This year follows the trend. According to a recent Redfin survey, 23% of prospective first-time homebuyers are waiting until after the election to make a purchase. Nearly a quarter of these buyers are likely holding off due to similar feelings of uncertainty.
Home Sales Rebound Post-Election
The positive aspect is that these postponed sales are not permanently lost; they are merely delayed. Historical trends indicate that sales typically rebound after elections. In fact, home sales have risen 82% of the time in the year following an election.
This is because, once the election concludes, buyers and sellers gain clarity about the future, leading to increased confidence in their decisions. This heightened assurance typically results in a surge in home sales.
Outlook for 2025
Historically, this suggests an increase in home sales for the coming year. Current forecasts align with this trend, anticipating a rise in sales. As shown in the graph below, the housing market is projected to close with around 4.6 million homes sold this year, with expectations of 5.2 million sales next year.
That fits the usual trend of rebounds following elections.
While the market may seem to be slowing down at the moment, this is more of a temporary dip than a lasting trend. Historically, once the uncertainty surrounding elections fades, buyers and sellers typically re-enter the market.
Key Takeaways
It’s essential to recognize that while election years can lead to a brief slowdown in the housing market, this dip is typically short-lived. These sales aren’t lost; historical data shows that home sales generally increase in the year following a Presidential election. Current forecasts suggest that 2025 will continue this trend. If you’re hesitant about making a move due to uncertainty, rest assured that the market is expected to gain momentum in the coming months.
