The federal government partially shut down early Saturday morning as Congress failed to enact a fiscal year 2026 spending package funding HUD, the Department of the Treasury and other agencies by the Jan. 31 deadline.
On Friday evening, the Senate approved the package, setting the stage for a House vote early this week. The package includes an extension of the National Flood Insurance Program (NFIP) through Sept. 30, 2026.
A lapse in authority for NFIP means Americans are unable to purchase or renew flood insurance policies through the program. Importantly, borrowers may turn to private flood insurance if the NFIP lapses during the shutdown.
The National Association of REALTORS® is urging Congress to reach a deal to quickly end the shutdown and minimize its impact on the real estate industry, says NAR Executive Vice President and Chief Advocacy Officer Shannon McGahn.
Once passed by the House and signed by President Trump, the spending package will represent a major victory for housing advocates with full funding for critical HUD programs, such as Housing Choice Vouchers, fair housing programs and housing counseling. Until then, HUD will operate under its government shutdown contingency plan. In an earlier spending package, Congress funded other federal agencies, including the Department of Veterans Affairs and the U.S. Department of Agriculture, so those agencies and the loan guaranty program they operate can continue to function normally.
Impact on HUD Programs
HUD’s contingency plan maintains many housing programs at reduced capacity, though others face serious disruption. For example, the Federal Housing Administration (FHA) will continue to endorse new single-family mortgage loans, thereby keeping its systems running. Likewise, essential FHA operations, including paying claims, servicing mortgages, loss mitigation and managing foreclosed properties (REO/HUD Homes) move forward, often via contractors.
Certain loan programs, however, are paused during the shutdown, including reverse mortgages, Title I Property Improvement Loans and Section 184 Indian Home Loans. Many actions needing staff input, such as processing certain types of condominium project approvals, are also suspended. The FHA Resource Center will remain open for questions, though with limited staff availability, possible longer wait times for assistance and limited ability to answer case-specific questions.
For housing counseling agencies, services may continue, but only if grant funds have already been awarded and cash flow levels permit. New grants, renewals or payment draws are paused except in emergencies, meaning some agencies may need to reduce or suspend offerings. Similarly, local Fair Housing Initiatives Program grantees—nonprofits conducting fair housing education, outreach and enforcement activities—face the same constraints and may need to scale back their work.
Housing Choice Voucher holders can expect assistance payments to continue under existing obligations, but additional funding requests or approvals will be delayed. New vouchers may be issued, but extended shutdowns create the risk of cashflow problems for public housing authorities (PHAs), so landlords and tenants alike should check in with their local PHAs for the latest status.
What’s Next
The House is expected to vote on the spending package as early as Tuesday of this week, though the outcome remains uncertain, given the evolving political environment. NAR staff continues to closely monitor federal agencies and work with Congress, the administration and industry partners to evaluate and address impacts on NAR members and their businesses.
“NAR is committed to working with lawmakers on both sides of the aisle to keep the government open and protect NFIP without delay,” says McGahn. “This is about keeping real estate transactions moving and ensuring families have the stability and protection they deserve.”
