The “Pull-Forward effect“ in real estate refers to a phenomenon where potential home buyers and sellers accelerate their plans to buy or sell a property due to a temporary change in housing market conditions, such as a change in interest rates or tax policies. This acceleration can lead to an increase in demand or supply in the short term, but it may also result in a decrease in demand or supply in the following period.

For example, if interest rates are expected to rise in the near future, potential home buyers may rush to purchase a property before the rates increase, leading to a surge in demand for housing. Once interest rates rise, demand may decrease as the cost of borrowing increases.

Similarly, if a tax policy change is expected to reduce the tax benefits of owning a home, some homeowners may decide to sell their property before the change takes effect, leading to an increase in supply and listings. Once the change is implemented, the supply may decrease as the tax benefits are reduced.
The pull-forward effect can have a significant impact on the real estate market, causing fluctuations in demand and supply that can be difficult to predict.

Here’s a list of potential triggers:

Interest Rates: Mortgage rates can change abruptly, and if somehow predicted to rise significantly enough, they could ignite a homeselling spree.

Mortgage Rates and Inflation: Home sales tend to remain constrained when mortgage rates are high. However, if mortgage rates decline, more buyers may enter the market, leading to increased demand.

Supply of Newly Built Homes: A bright spot for homebuyers is the growing supply of newly built homes. In June, supply for new single-family homes rose to 9.3 months, more than 2.5 times the level of existing single-family supply. This increased supply could encourage more homebuyers to make purchases.

Local Market Variations: While home prices are expected to hold their value in the short term due to home supply shortages, variations exist between markets based on local fundamentals. Some areas may experience stronger home price growth than others.

Rental Growth: Rental growth is expected to flatten out as more supply enters fast-growing markets. However, rental rates for single-family homes may rise faster compared to multifamily units.

Social Influence: It’s often forgotten that homebuyers and homesellers are humans and members of society, variably, and therefore, to some degree, all subject to being influenced by their peers and the “Fear Of Missing Out” (FOMO). If a neighbor, even more if multiple, or a relative, friend, teammate, or coworker, decides to sell or buy, that action plays a strong role in a homeowner’s decision to sell or a homebuyer’s decision to buy, and it shouldn’t go overlooked as it can create a snowball effect greatly enhanced by social media and seriously affect the housing market, one way or another.

Looking more specifically to the phenomenon, depending on which exact behavior, the Pull-Forward effect may be called Forward-Buying or Forward-Selling, obviously by Forward-Buyers and Forward-Sellers.