The Housing Market During a Government Shutdown. There’s been a lot of talk lately about how a government shutdown impacts the housing market. You might be wondering: Is it causing everything to grind to a halt?
The short answer? No.
The housing market doesn’t stop. It keeps moving. Homes are still being bought and sold, contracts are still being signed, and closings are still happening. The difference is that a few parts of the process may slow down a little, but overall, the market continues to function.
Here’s What Typically Happens
Whenever the government shuts down, some federal agencies temporarily close or scale back their operations. That can cause a few hiccups in real estate, especially when it comes to processing certain types of government loans and insurance requirements:
- “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 Cotality
- “By recent estimates, more than 2,500 mortgage originations per working day are at risk of delays during a shutdown . . .” – Zillow
Even with those challenges and delays, most transactions still go through. Buyers keep buying, sellers keep selling, and agents keep helping people move forward.
The Housing Market Usually Bounces Back Fast
And you can see that play out in this data.
Data from the National Association of Realtors (NAR) shows existing home sales slowed for about two months, and then rebounded quickly as delayed closings worked their way through the system when the government reopened (see graph below):
If you’re in the middle of buying or selling a home, don’t panic. Most deals will still move forward, even if it takes a few extra days. Jeff Ostrowski, Housing Market Analyst at Bankrate, explains:
“If you’re expecting to close in a week or a month, there could be some slight delay, but I think for most people, it’s probably going to be a blip more than a real deal killer.”
And if you’re just starting to think about buying or selling, this could actually work in your favor.