How are Home Sales Affected by Presidential Elections?

Several factors can affect the real estate market and housing prices, among them the overall strength of the current economy, interest rates, and inventory.  Another event that happens every four years that can have an impact on home sales is a U.S. presidential election.  According to Meyers Research, there was a median 15% drop in new home sales activity from October to November over the past 13 election year cycles.  During that same period in the year after the election, the median drop was 8%.  The study also found that the year after the election showed the best sales of the four-year cycle. This suggests that housing sales aren’t necessarily lost in an election year, but are instead pushed to the following year.

And according to a study conducted by New York real estate appraiser Johnathan Miller,  Manhattan co-op sales are progressively weaker in an election year than a non-election year, with the most significant difference happening in September when sales are 12.7% lower than a non-election year.  But like the Meyers study, Miller found that the sales began to rise again once the election was over.

So what causes the decline in sales?  In a 2014 paper written by economist Brandice Canes-Wrone of Princeton University, she attributes the slow in sales during an election to the reluctance of buyers to purchase since they aren’t sure how the election will affect their finances. She also found that where the races were especially close, and the winner got less than 55% of the vote, home sales fell between a third and half of a percentage point. 

Because of the current low-inventory housing market, a presidential election year may be a good time if you are looking to purchase. With fewer buyers in the market, there’s less competition, and sellers are potentially willing to cut deals. Like famed investor Warren Buffet says, “Be fearful when others are greedy, and greedy when others are fearful.”

If you’re looking to purchase a home in 2020, contact the experts at NASB to help you secure the right mortgage loan.  Give us a call at 816-465-0753.