Shutdown or Not, the Housing Market Keeps Moving

Will a Government Shutdown Freeze the Housing Market? Not Quite.

There’s been plenty of buzz lately about how a government shutdown affects the housing market. You might be wondering — is everything grinding to a halt?

The short answer: no.

Homes are still being bought and sold. Contracts are still being signed. Closings are still happening.

A government shutdown doesn’t stop real estate. It just slows down a few moving parts.

What Typically Happens During a Shutdown

When the federal government shuts down, certain agencies close or reduce staff, which can cause delays for specific loan types and insurance programs tied to federal departments.

Here’s what that looks like:

• FHA, VA, and USDA loans may take longer to process due to agency furloughs.

  “Applicants for FHA, VA, or USDA loans—which account for about one-quarter of all mortgage applications—may encounter significant processing delays due to agency furloughs.”
  — Selma Hepp, Chief Economist at CoreLogic

• Flood insurance approvals can temporarily pause since the National Flood Insurance Program (NFIP) may be affected. That means closings in flood zones could face short-term delays.

Zillow estimates that “more than 2,500 mortgage originations per working day are at risk of delays during a shutdown.”

Still, the key takeaway: delays don’t equal dead deals. Most transactions continue — they just take a little longer to close.

The Market Always Bounces Back Fast

If you look back at the last major government shutdown (late 2018–early 2019), you’ll see exactly how this plays out.

Sales activity dipped slightly for about two months, then quickly rebounded as soon as the government reopened.

Data from the National Association of Realtors (NAR) shows the brief slowdown lined up almost perfectly with the 35-day shutdown — and then existing home sales surged again as delayed closings cleared.

This wasn’t a seasonal drop — it was a short-term blip that corrected immediately.

What It Means for Buyers and Sellers

If you’re in escrow right now, don’t panic. Most deals will still close. You might just need a little patience.

As Jeff Ostrowski, Housing Market Analyst at Bankrate, puts it:

“If you’re expecting to close in a week or a month, there could be some slight delay, but for most people, it’s probably going to be a blip more than a deal killer.”

If you’re thinking about buying or selling, a temporary slowdown could actually work in your favor.

When uncertainty hits, some people hit pause. That means:

• Less buyer competition for active listings

• More negotiation power for buyers who stay in the game

• Motivated sellers willing to make a deal

For a short window, you could find opportunities that disappear once the market picks back up — and it always does.

Bottom Line

A government shutdown can cause short-term delays, but it doesn’t derail the housing market.

The last time this happened, sales bounced right back as soon as things reopened.

If you’re unsure how the current situation might affect your plans — or you just want clear answers without the headlines — connect with a local real estate agent who can walk you through what’s really happening in your market.

Because even when Washington pauses, real estate doesn’t.