‘Our phones have gone quiet’ – Shutdown paralyzes federal homebuying programs
The government shutdown has entered uncharted territory, and is now the longest complete shutdown in American history. We are hearing first-hand that the impact on the housing sector is serious and getting worse by the day.
In rural Oklahoma, Realtor Christina shares what she’s seeing. “Nearly 80 percent of our home loans are USDA or HUD-184 programs,” she said. “We’re already feeling the impact. Two rounds were scheduled to close on Friday, but after that, our pipeline has basically ground to a halt until the government reopens and approvals resume.”
This means that almost every aspect of its business has been frozen. “Our phones have gone quiet,” she said. “Offers are not being made or accepted, and offers have slowed significantly. We have a fully pending triple closing awaiting USDA buyers, and we are now over a month into extensions. Each of these buyers has already invested thousands in earnest money, appraisals, inspections, and title work, and we are doing everything we can to keep sellers from walking away.”
Her story embodies what real estate professionals in small towns across the country face. For many buyers, this home is their opportunity to achieve stability and generational wealth. And every day, the lockdown continues to push that dream further out of reach.
The USDA and HUD-184 programs Christina referred to are designed specifically for communities that cannot afford any interruption. USDA loans serve low- to moderate-income families in rural America, while HUD-184 loans provide financing to Native American borrowers who often face limited mortgage options. Loan approvals are also supported by the Federal Housing Administration and the Department of Veterans Affairs. Together, these programs represent a lifeline for millions of Americans.
Now, with rural and tribal mortgage programs frozen, transactions have been halted indefinitely. Ratings expire, price locks expire, and approvals disappear. For families living paycheck to paycheck, there is no cushion to start over. Sellers, unsure when they will close, are walking away from deals and relisting their homes — often at higher prices.
Her experience illustrates a truth that often misses the headlines: For many homebuyers and sellers, the damage from the federal shutdown is already there. What Washington policymakers call a “temporary funding cut” is actually a permanent setback for families who saved, planned and dreamed of homeownership.
The effects ripple through local economies. Every late closing hurts an entire network of professionals — appraisers, inspectors, contractors, lenders, and title companies — and saps momentum from small towns and city neighborhoods alike.
The real estate sector represents nearly one-fifth of the entire U.S. economy, with each home sale generating more than $125,000 in local economic activity and supporting two jobs. When transactions stop, that economic engine stops.
This is not limited to at-risk loan programs. Since October 1, the National Flood Insurance Program has been unable to issue or renew new insurance policies without reauthorization from Congress. This leaves homebuyers in flood-prone areas without coverage for a hazard that could cause $25,000 in damage from just one inch of flooding.
NAR’s research, based on the 60-day passage of the National Flood Insurance Program in 2010, found that as many as 40,000 home sales per month were affected, putting nearly $7 billion in real estate transactions at risk.
This is only the short-term effect. While National Flood Insurance Program policies remain active and transferable, with a 30-day grace period for renewal, uncertainty increases the longer it takes to lapse. If the shutdown continues, many policies issued in October may begin to expire, leaving not only buyers but also current owners in areas at risk at the height of hurricane season without protection when it’s needed most.
If the lockdown extends beyond 30 days, the impacts will deepen significantly across the board. The recent extended government shutdown cost the US economy $11 billion, according to the Congressional Budget Office — $3 billion of which was permanently lost. We are once again about to repeat those mistakes. The longer the government shutdown lasts, the greater the risk to market stability, affordability, and public confidence in housing.
Real estate doesn’t stop when Washington stops. Buyers and sellers continue to make plans, invest in their communities, and pursue opportunities. They deserve a government that keeps pace with progress.
The National Association of Realtors is urging Congress to meet and pass a clean, bipartisan continuing resolution or long-term financing package to restore stability to the housing market and the broader economy.
The shutdown may be centered in Washington, but its costs are being paid in every community across America — in lost sales, dead loans and quiet phones in places like Christina’s hometown of Oklahoma. Every day that passes without work destroys the foundations of the American dream.
Shannon McGann is Executive Vice President and Chief Advocacy Officer for the National Association of Realtors.
