Real Estate

Shutdown Stalls Home Dreams: How Delays Threaten Buyers and the Housing Market

Shutdown delays are stalling home sales, impacting buyers and threatening the housing market.

byAndres Castro

October 31, 2025, 8:11 PM

Woman with her eyes closed and fingers crossed, dreaming of a house visualized in an orange thought bubble.

A woman wishing for a home, representing how market delays threaten potential buyers' dreams. By MDL.

Executive Summary

The ongoing federal government shutdown is significantly disrupting the U.S. housing market by severely delaying mortgage and insurance applications.

This disruption is causing transactions to stall, leading to buyers losing financing, sellers withdrawing from deals, and a general erosion of confidence in the real estate sector.

The personal toll is exemplified by individuals like the Sanderson couple, whose home purchase is jeopardized due to delays in processing federally-backed loans like those from the U.S. Agriculture Department.

The Trajectory So Far

The ongoing federal government shutdown is significantly disrupting the U.S. housing market by halting or severely delaying critical federal services essential for real estate transactions, particularly the processing of mortgage and insurance applications, including those backed by federal agencies like the U.S. Agriculture Department, leading to stalled deals, lost financing, and a general erosion of market confidence.

Assessing Risk and Value

The ongoing government shutdown significantly elevates risk in the housing market, leading to stalled transactions, potential loss of financing, and an overall erosion of buyer and seller confidence. Investors in real estate-related assets, such as mortgage-backed securities or REITs, face increased uncertainty regarding transaction volumes and asset valuations, with federally-backed loans particularly vulnerable to processing delays.

Expert Predictions and Forecasts

Shannon McGahn of the National Association of Realtors predicts that the longer the shutdown persists, the more widespread the issues in the housing market will become, leading to increasing backlogs and uncertainty for both buyers and sellers.

The general outlook indicates that home buyers and sellers will continue to face an unpredictable and challenging environment until government operations normalize.

Specific federal loan programs, such as those backed by the U.S. Agriculture Department, are directly impacted by government closures, jeopardizing transactions and leading to buyers losing financing and sellers withdrawing from deals.

The ongoing federal government shutdown is significantly disrupting the U.S. housing market, leaving potential home buyers in a precarious state as mortgage and insurance applications face severe delays. This halt in government operations is causing transactions to stall, leading to buyers losing financing, sellers withdrawing from deals, and a general erosion of confidence across the real estate sector.

Market Impact

According to Shannon McGahn, chief advocacy officer at the National Association of Realtors, the longer the shutdown persists, the more widespread these issues become. Each day adds to the backlog of applications, creating uncertainty for both buyers and sellers navigating an already complex market.

The ripple effects extend beyond individual transactions, threatening the stability of the broader housing economy. Delays in critical federal services necessary for closing real estate deals are creating a domino effect of complications.

Buyers in Limbo

The personal toll of the shutdown is exemplified by individuals like Maresa and Loren Sanderson, who have spent two months attempting to close on their first home while living in a hotel. The couple’s September offer on a townhouse near Fredericksburg, Virginia, is now in jeopardy due to the delays.

Their situation is particularly sensitive as they opted for a mortgage backed by the U.S. Agriculture Department, which allowed them to secure a $0 down payment. Federal backing for such loans means that processing and approval are directly impacted by government closures.

Outlook

The federal government shutdown continues to cast a long shadow over the housing market, underscoring the vital role of government agencies in facilitating real estate transactions. Until operations normalize, home buyers and sellers face an unpredictable and challenging environment.