After the results of the 2024 US presidential election were announced, with former President Trump winning, the US dollar and stock markets continued to strengthen. The highly anticipated US real estate market also began to rebound.
In the months leading up to the election, the US housing market briefly showed signs of warming up, but quickly fell into a slump again. Apart from factors such as high house prices and persistently high mortgage rates, various uncertainties before the election also caused potential buyers to halt their purchases.
Many potential first-time buyers have expressed that they will consider the economic development after the presidential election before deciding whether to buy a house. Even in the booming California housing market, home sales in September stagnated, hitting the lowest level so far this year.
With the election results now settled, online real estate brokerage company Redfin has found that both the Homebuyer Demand Index and Mortgage-rate Locks have risen, indicating a return of buyers to the market.
In just four days from November 7th to 11th, Redfin’s Homebuyer Demand Index surged by at least 15%, reaching the highest level in nearly a year and a half. Data from real estate analysis company Optimal Blue shows that as of November 12th, the Mortgage-rate Locks index has more than doubled compared to a month ago.
Changes in population are also driving housing sales. Redfin conducted a survey after the election which revealed that over 20% of Americans are considering moving, with 26% considering relocating to another state. Among those more likely to move, 17% said the election results have increased their likelihood of buying a house.
“This summer and early fall, home buying activities were slower than expected, especially when rates had dropped to the 6% range. It’s clear buyers were waiting for the election to end and hoping for another Fed rate cut, which both happened last week,” said Redfin economist Chen Zhao. “Buyers now have few reasons to wait, especially since mortgage rates are not expected to drop significantly in the short term.”
On November 7th after the election, the Fed cut rates by another basis point, but mortgage rates did not follow suit. According to Freddie Mac data for the week ending November 14th, the average 30-year fixed mortgage rate was 6.78% and the average 15-year fixed mortgage rate was 5.99%.
Fed Chairman Jerome Powell said on the 14th that the US economy is performing “very well” and there is no hurry to cut rates.
Taking all factors into consideration, Lawrence Yun, Chief Economist of the National Association of Realtors (NAR), believes that it will be difficult for US mortgage rates to return to the 4% level in 2025. “According to forecasts, we are more likely to return to around 6%, and this will become the new normal, fluctuating between 5.5% and 6.5%.”
The current median home price in the US is approximately $404,500, and Yun predicts that by 2025, the median home price will rise to $410,700 and to $420,000 by 2026.
He also predicts a 9% increase in US home sales in 2025 and a 13% increase in 2026, suggesting that perhaps the worst situation is about to end.
The forecast for the California housing market is very similar. Jordan Levine, Vice President and Chief Economist of the California Association of Realtors (CAR), previously predicted that California’s home sales are expected to increase in 2025, with prices continuing to rise. He forecasts that the median home price in California in 2025 will increase from $869,500 in 2024 to $909,400, representing a 4.6% increase.