Planning For 2020: What An Election Year Means For Home Sales

Presidential elections are an easy scapegoat for changes in consumer spending. Uncertainty can, and does, have an impact on growth, but extent and duration are what matter.  As 2020 planning gets underway, what is the relationship between presidential elections and new home sales?

Expect November 2020 To Be Slow

Today’s economy is fraught with uncertainty, from trade wars and slowing global growth to the risks of being in the longest economic expansion on record. We now have to add in a presidential election.

Consumer staples historically make it through election cycles unscathed. The housing industry, however, is the victim of deferred choices. We analyzed the data going back 50 years to understand vulnerabilities in the real estate market. What we found is that seasonality affects new home sales every fall, but the drop is more pronounced in an election year:

Over the past 13 election cycles, there is a contrast in the median change in sales activity from October to November.

With today’s heightened fears of a recession and the impact of politics on the economy and stock market, consumer caution could exacerbate this trend during the 2020 election season. 

History suggests, however, that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year as long as the economy stays on track. 

As you consider these stats for your markets, know the election season will inevitably generate new policy proposals that could have an outsized impact on certain regions or industries, which could cause local housing dynamics to depart from the trends above. 

Collectively, history and our data tell us that regardless of how the market evolves over the coming year, the election alone is likely to have an impact on housing.