“Each day that passes during the shutdown, potential real-life impacts will be felt in America’s housing market,” says NAR’s Shannon McGahn.
A picture of the U.S. Capitol building

The Oct. 1 deadline for Congress to pass a stopgap spending measure or reach a larger spending agreement has come and gone, and a government shutdown has officially begun. The shutdown will affect housing, mortgage and other programs critical to the real estate economy. Services deemed essential, such as the U.S. Postal Service, will continue to operate.

The shutdown means a lapse in authority for the National Flood Insurance Program. During the lapse, Americans will be unable to purchase new NFIP policies, and current policyholders will be unable to renew their coverage. On Sept. 29, the National Association of REALTORS® issued a targeted Call for Action, asking Federal Political Coordinators to reach out to their members of Congress and highlight the importance of NFIP to homeowners.

In addition to the Call for Action, NAR sent a letterpdf to congressional leadership urging them to find a path forward and end the shutdown as soon as possible, whether that be in the continuing resolution or as a standalone extension. NAR also issued guidance to its members on how a government shutdown could impact real estate. (Download a PDF of the latest guidance as of Oct. 1.pdf)

What Happens in a Shutdown?

Since 1980, there have been 14 government shutdowns, with the most recent lasting 34 days from December 2018 to January 2019. According to the Congressional Budget Office report, the last government shutdown, which was a partial shutdown, cost the economy $11 billion, and $3 billion of that money was never recovered.

Every agency has its own plan for shutdowns. Many federal departments and agencies furlough workers until the shutdown ends. Those agencies will stop or reduce the services they provide. Their help desks may have little or no staffing. Employees deemed essential must keep working without pay until funding is passed.

In a previous NAR survey of members on the impact of government shutdowns on their business, 75% said the shutdown had no impact on their contract signings or closings. However, 11% reported an impact on current clients, and 11% reported an impact on potential clients.

How Does a Shutdown End?

To end a government shutdown, Congress must either pass appropriations bills for the fiscal year or pass temporary spending bills known as continuing resolutions that fund government operations until a specified date. Although the House passed a continuing resolution to fund the government through Nov. 21, that measure failed in the Senate. Negotiations on a spending bill will continue in the Senate until an agreement is made.

“NAR is committed to working with lawmakers on both sides of the aisle to reopen the government and reauthorize NFIP without delay,” says NAR Executive Vice President and Chief Advocacy Officer Shannon McGahn. “This is about keeping real estate transactions moving and ensuring families have the stability and protection they deserve.”

“According to NAR research, the NFIP supports roughly half a million home sales annually, generating 1 million jobs and contributing $70 billion to the U.S. economy,” McGahn says. “Each day that passes during the shutdown, potential real-life impacts will be felt in America’s housing market, which accounts for nearly 20% of the U.S. economy.”