There’s been a lot of buzz lately about a possible government shutdown and what it could mean for the housing market. You might be asking yourself, “Does this mean everything’s coming to a stop?” It’s a fair question—when headlines sound alarming, it’s easy to think the entire market could freeze. But the reality is a little more nuanced. Let’s break down what’s really going on and how it might (or might not) affect your plans to buy or sell a home.

The short answer? Nope — not at all.

The housing market doesn’t just come to a standstill — it keeps moving forward. People are still buying and selling homes, offers are still being made, contracts are still being signed, and closings are still happening every single day.

Sure, a government shutdown might cause a few slowdowns here and there. Maybe some paperwork takes a bit longer to process, or certain verifications tied to federal agencies get delayed. But for the most part, the wheels keep turning. The real estate market continues to function — just with a few minor speed bumps along the way.

 Here’s What Typically Happens

Whenever the government shuts down, it doesn’t just impact federal workers — it can also ripple into the housing market. Some government agencies either close or slow down their operations during that time, which means certain parts of the real estate process can hit a temporary snag. For example, government-backed loans (like FHA, VA, or USDA) and some types of insurance or verification requirements might take longer to process until everything is back up and running.

• “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

• Flood insurance approvals may also be paused. The National Flood Insurance Program can be temporarily affected, which delays closings in flood zones.

Even with all those challenges and occasional delays, most real estate transactions still make it across the finish line. Buyers are still out there looking for their next home, sellers are still listing and negotiating, and agents are working hard to keep everything moving. The process might not always be smooth, but the market keeps turning — people continue to buy, sell, and move forward with their plans.

The Housing Market Usually Bounces Back Fast

You can actually see this pattern when you look at the numbers. Take the most recent government shutdown, for example — the one that started at the end of 2018 and lasted 35 days. During that period, home sales did slow down a bit, but it was only a minor dip. Once the government reopened, activity bounced back almost immediately, showing that while shutdowns can create a temporary pause, they don’t derail the market for long.

According to data from the National Association of Realtors (NAR), there was a brief slowdown in existing home sales that lasted for about two months. But once the government reopened, the market bounced back surprisingly fast. Those delayed closings that had been stuck in the pipeline finally went through, and sales quickly picked up again. You can really see that rebound in the graph below—it shows how the market paused for a bit, then regained its momentum once things got moving again.

What’s really interesting here is that the slowdown you see in the orange bars on this graph isn’t just part of the usual seasonal ups and downs you might expect in the housing market. Instead, this sharper, more sudden dip corresponds perfectly with the 35-day government shutdown. And just as quickly as it dropped, sales bounced back once the shutdown ended, showing how temporary the impact really was.

What This Means for You

If you’re currently in the process of buying or selling a home, there’s no need to panic. The majority of transactions still go through, even if a government slowdown means things take a few extra days. Jeff Ostrowski, a Housing Market Analyst at Bankrate, puts it into perspective:

““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.”
”

— Jeff Ostrowski, Housing Market Analyst at Bankrate

And if you’re just beginning to think about buying or selling, this kind of situation might actually play to your advantage. During periods of uncertainty, like a government slowdown, some buyers and sellers tend to hit the pause button, waiting to see what happens next. That hesitation can create a small window of opportunity for you — fewer competitors in the market can mean less competition for homes or more motivated buyers when you’re selling.

When the market quiets down a bit and fewer people are actively buying or selling, it can actually work in your favor. Well-prepared buyers might face less competition when looking at homes, and sellers who are ready to make a deal could be more open to negotiation. These temporary slowdowns create a unique window of opportunity — a chance to make a move that might be much harder once the market picks up again and activity ramps back up.

Bottom Line

A government shutdown can definitely slow things down for a few buyers in the short term, but it’s important to remember that it doesn’t derail the housing market as a whole. The last time we saw a shutdown like this, home sales dipped briefly, but as soon as the government reopened, activity bounced back quickly. In other words, it’s more of a temporary pause than a permanent roadblock.

If you’re feeling unsure about how a government slowdown might impact your buying or selling plans, or if you just want some clarity on what’s going on in the market, I’d be happy to chat. We can go over the details together and figure out the best way to move forward with confidence.