With the full government shutdown now stretching beyond 30 days, the nation finds itself in unprecedented territory. The effects extend far beyond Washington. Local economies are beginning to feel the strain, and home buyers across the country are seeing slower activity and shaken market confidence. This is now the longest full government shutdown in U.S. history.
Critical housing and mortgage programs are operating at limited capacity, if at all, leaving buyers stranded, sellers waiting and real estate professionals caught in the middle. Many federal agencies that play essential roles in housing are now working with reduced staff or have suspended vital functions entirely.
The National Flood Insurance Program (NFIP) authority to issue new policies has lapsed. While existing policies remain active and transferable, with a 30-day grace period for renewal, uncertainty grows the longer the lapse continues. As the shutdown drags on, many homeowners and businesses that rely on the NFIP could see their coverage expire, leaving families and properties in the highest-risk areas exposed in the middle of hurricane season.
“We’ve never seen a full government shutdown go past 30 days, so it is difficult to know the long-term effects. But we do know there’s a ripple effect that gets worse by the day. The effects on federal housing programs are being felt throughout the country. Our members are reporting it in real time,” says NAR Executive Vice President and Chief Advocacy Officer Shannon McGahn.
“The NFIP cannot issue new flood insurance policies. Delays in FHA and VA loan closings, a complete stoppage of new USDA rural home loans, and increasing uncertainty for affordable housing providers are destabilizing the market and hurting families, home buyers and sellers nationwide,” McGahn says. “We continue to encourage Congress to pass a clean, bipartisan continuing resolution or long-term funding package to reopen the government. Each additional day of uncertainty threatens programs that help buyers, sellers and property owners navigate an already-challenging market.”
Broader Business Coalition Response
NAR’s call to reopen the government is part of a unified push across the business community. This week, a broad cross-section of national business associations—including Airlines for America, the American Bankers Association, the American Hotel & Lodging Association, the Business Roundtable and NAR—issued a joint statement urging Congress to swiftly pass a clean continuing resolution to restore government operations.
“Government shutdowns impose real, escalating costs,” the coalition wrote. “Public estimates of the current funding lapse suggest $10 billion–$15 billion per week in lost output and economic activity. The longer the shutdown persists, the larger and more durable the economic damage becomes—and some of it could never be recovered.”
The statement reflects the recognition across industries that economic stability depends on government stability.
Real-World Impact
As federal workers miss multiple paychecks, short-term cash flow issues grow. Even though back pay is guaranteed, uncertainty can make potential buyers hesitate. NAR Chief Economist Dr. Lawrence Yun indicated that “mortgage rates are trending toward three-year lows, which should further improve affordability, though the government shutdown could temporarily slow home sales activity.” In communities with large numbers of government employees or contractors, listings may stay on the market longer and sellers may begin to adjust expectations.
NAR last week encouraged all 50 state REALTOR® associations to send letters to their senators and representatives urging them to reopen the government and outlining the harmful effects the shutdown is having on the real estate industry in their area. More than 40 state REALTOR® associations have already responded, demanding that Congress do what’s necessary to reopen government reopen and restore stability in the real estate sector.
On Oct. 22, NAR issued a call for information to the full NAR membership. Different from a call for action, in which members click to send a message to their members of Congress, the call for information asks members to write and submit their own stories on the impact they’re experiencing from the government shutdown.
Engagement metrics will be significantly different from a typical one-click CFA.
“Our rapid call for information drew over 600 responses from members sharing firsthand how the shutdown is stalling deals, draining savings and halting closings,” McGahn says.
Each day, there are roughly 2,000 FHA loan closings in the U.S., according to data from 2024. While the shutdown has not affected most of these closings, many FHA borrowers are experiencing disruptions in their homebuying process due to delays in receiving required assistance to address specific circumstances or information needed to close, like federal payoff statements and IRS income verifications. FHA borrowers now looking to buy a condominium can particularly face shutdown-related delays, as only a small percentage of condo buildings are pre-approved for FHA financing and FHA’s process for approving condo buildings and individual units has been suspended during the shutdown. FHA borrowers can check if a condo building is already FHA-approved.
At the same time, roughly 1,000 VA loans close each day. While VA loans should continue to proceed during the shutdown, similar to FHA loans, some borrowers are experiencing delays in closing, particularly active-duty service members who are not receiving pay during the shutdown, which may complicate their ability to close. Additionally, the shutdown may delay the processing of military relocations that are already underway, affecting service members' ability to complete their home purchases at their new duty stations.
USDA loans, which serve as a vital source of financing in rural communities where conventional lending options may be limited, have been completely paused during the shutdown. While USDA loans represent a smaller portion of the overall mortgage market, their suspension leaves many rural borrowers without viable financing alternatives.
The shutdown may be centered in Washington, but its costs are being paid in communities across America.
