Why Home Sales Bounce Back After Presidential Elections

With the 2024 Presidential election on the horizon, you may be curious about its potential impact on the housing market. Let’s delve into the details.

Election Years Often See a Temporary Slowdown

Typically, home sales experience a slight decline in the fall due to seasonal trends. However, data from BTIG suggests that during election years, there tends to be a more significant drop in home sales in the month leading up to Election Day (see graph below).

Why does this happen? The answer lies in uncertainty. Many consumers hesitate to make major decisions or purchases as they await the election results. This pattern has been consistently observed, particularly among buyers and sellers in the housing market.

This year follows the same trend. A recent survey from Redfin revealed that 23% of potential first-time homebuyers plan to wait until after the election to purchase a home. This represents nearly a quarter of first-time buyers putting their plans on hold, likely due to similar feelings of uncertainty.

Home Sales Recover After the Election

The silver lining is that these postponed sales aren’t lost—they’re simply delayed. Historically, sales tend to bounce back after the election concludes. In fact, home sales have increased 82% of the time in the year following an election (see chart below).

Once the election uncertainties subside, buyers and sellers gain clarity about the future and generally feel more confident in making decisions, which results in a surge in home sales.

What to Anticipate in 2025

If history serves as a guide, we can expect an increase in home sales next year. Current forecasts align with this expectation. As illustrated in the graph below, the housing market is projected to sell a total of 4.6 million homes this year, with estimates rising to 5.2 million total sales next year (see graph below).

This aligns with the usual pattern of recovery following an election.

In summary, while it may seem like the market is experiencing a slowdown at present, this is more a temporary dip than a long-term trend. As has been the case in previous elections, once the uncertainty fades, buyers and sellers will return to the market.

Moral of the Story

It’s crucial to remember that election years typically induce a short-term slowdown in the housing market; however, this pause is often temporary. Those sales are not lost. Data indicates that home sales generally rise the year following a Presidential election, and current forecasts suggest that 2025 will be no different. If you’re waiting for more clarity before making a move, rest assured that the market is anticipated to gain momentum in the coming months.

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