The presidential election, global unrest, and policy action by the U.S. Federal Reserve are all external factors that could have wide-ranging impacts on the housing market. With buyers already sensitive to prices and rates, these external factors have the potential to influence how the housing market behaves in 2024. Realtor.com explored how the election, wars, unemployment, and Fed actions could impact the market.
The possibility of a new administration with new policies and all of the anxiety that brings can cause some would-be buyers and sellers to hit the pause button, regardless of which party ticket they prefer.
But the election is typically more of a brief blip than something that causes lasting damage.
“Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal,” says Ali Wolf, chief economist of building consultancy Zonda.
By December, the market has usually returned to normal, she says.
Another threat to the housing market is a recession with widespread unemployment. Since March 2022, the Fed raised interest rates 11 times in its fight to bring down inflation. While the Fed plans to begin cutting rates this year as long as inflation continues to come down, economists are divided on whether the Fed will achieve its “soft landing.”
Layoffs were down 20% year over year in January, according to Challenger, Gray & Christmas. And overall unemployment remained low, at 3.7% in January, according to federal unemployment data. (The data generally takes some time to catch up to what’s happening in the labor market.)
“At least right now, the fundamentals of the economy, despite some hiccups, are doing pretty good,” says Jacob Channel, LendingTree’s senior economist. “While things are far from perfect, the economy is probably doing better than people want to give it credit for.”
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