As the 2024 presidential race heats up, a major question looms among homebuyers: could election year pressure spur the rate relief they’ve been waiting for?

After wrong-footing predictions in 2023, forecasters are reluctant to stake their reputations on calling where rates will finish this year. However, historical data reveals a consistent trend of dipping mortgage rates during election seasons. 

The Precedent: A Look Back

In the months preceding recent votes in 2008, 2012, 2016 and 2020, 30-year fixed rates marked a noticeable slide — especially in the critical fall homebuying window from late summer through November. Some analysts attribute this to a motivation from incumbent parties to juice the economy right when voters head to the polls. Though the Fed declares its political independence, the incentives surrounding an election are inescapable.

So could 2024 bring a repeat relief rally? At the moment, rates hover stubbornly around 7% — but the winds seem to be shifting.

Inflation vs. Employment: Dueling Indicators for Rate Relief

Much depends on how inflation data pans out. Markets fixated on a hot January CPI read, sparking worries that the Fed’s projected rate cuts would evaporate. However, the Fed’s preferred PCE measure tends to print cooler numbers, and analysts expect the next PCE index in late February to show inflation slowing. If price rises continue a downward trajectory, the Fed could regain confidence for reducing rates within the next six months.

Employment stats also hold heavy influence. On the surface, blockbuster job growth like January’s 517,000 gain makes the labor market look robust. But deeper dysfunction lurks beneath the headline numbers. Workforce participation still lags pre-pandemic levels as many Americans delay re-entry, while average hours logged per week have plunged across both blue and white collar roles. These cracks suggest the job market is more fragile than it appears at first glance. If unemployment claims remain depressed and wage growth shows signs of slowing in upcoming spring and summer reports, the Fed could pull the trigger on cuts.

The Bottom Line

The million dollar question is whether rate drops could overlap with key campaigning months this fall. For homeowners and buyers battered by 2022’s affordability crisis, a September or October rate dip would bring welcome relief. Even a small quarter- or half-point reduction could spur renewed demand to seize low rates before an uncertain 2025.

For now, the crystal ball remains cloudy. But as election season goes into full gear, don’t be surprised if political undercurrents steer rates below current expectations. For once, the power plays in Washington could provide a much-needed tailwind for housing.