Real Estate

Government Shutdown’s Housing Market Impact: How South Dakota Buyers Are Seizing the Moment

Shutdown-driven lack of labor data has created a buyer’s market in South Dakota with lower mortgage rates.

byAndres Castro

November 1, 2025, 10:30 AM

High aerial view of a dense, grid-patterned suburban neighborhood with single-family houses and green lawns.

Overhead aerial view of a dense residential suburban area illustrating the current housing market. By MDL.

Executive Summary

The ongoing government shutdown is keeping mortgage rates low, with South Dakota seeing rates dip to three-year lows in the low six and mid-five percent range, creating a refinancing opportunity due to a lack of labor data.

The current low mortgage rates and increased housing inventory have shifted the market into a buyer’s market, providing purchasers with opportunities for deals and allowing them to be more selective.

Mortgage rates are expected to stabilize between 5.5 percent and 6.5 percent after the government reopens, with future fluctuations dependent on labor data, while buyers are exercising patience despite increased affordability.

The Trajectory So Far

The current dip in mortgage rates and the shift to a buyer’s market are primarily driven by an ongoing federal government shutdown, which has resulted in a lack of crucial labor data, preventing investors in the mortgage bond market from fully assessing the economic landscape and thus holding rates low and steady.

Assessing Risk and Value

The ongoing government shutdown has pushed mortgage rates to multi-year lows due to a lack of labor data, creating an immediate window for homeowners to refinance and for buyers to capitalize on increased affordability in a shifting buyer’s market. While this presents opportunities, investors face short-term uncertainty regarding future rate trajectories, as the release of post-shutdown labor data could trigger adjustments, though the market is expected to stabilize into a less volatile 5.5% to 6.5% range long-term.

Expert Predictions and Forecasts

Mortgage Banker Devin Malmgren attributes the current low and steady mortgage rates primarily to the federal government shutdown, citing a lack of labor data preventing investors from fully assessing the economic landscape.

Malmgren predicts that after the government reopens, if labor data reveals a cooling labor market, rates could potentially lower further, while stronger data might lead to a slight uptick; he anticipates less volatility, with rates likely settling into a new normal between 5.5 percent and 6.5 percent.

Realtor Daniel Brunz observes that consistently low mortgage rates and an increased supply of available homes have shifted the market into a buyer’s market, leading to increased buyer interest but also greater patience and selectivity among purchasers.

The ongoing government shutdown in Washington D.C. is having a notable impact on the housing market, particularly in South Dakota, where mortgage rates have seen a recent dip, settling into a buyer’s market. Rates, which were in the low seven and low-to-mid six percent range in January, have now fallen to the low six and mid-five percent range, representing the lowest levels seen in three years.

Mortgage Rate Dynamics Amid Shutdown

Mortgage rates have been on a gradual decline since July, but the federal government shutdown is cited as a significant factor in holding these rates low and steady. According to Mortgage Banker Devin Malmgren, the primary cause is a lack of labor data, which prevents investors in the mortgage bond market from fully assessing the economic landscape.

This market condition has created a unique window of opportunity for homeowners considering refinancing. Malmgren noted a significant increase in phone calls and applications, as the shift from a seven percent to a six percent interest rate substantially improves affordability for many.

Shifting to a Buyer’s Market

The current environment has fundamentally transformed the housing market into a buyer’s market, a situation not seen by purchasers in quite some time. Buyers are now finding opportunities for good deals, including price reductions and seller concessions, as the balance of power shifts in their favor.

In the Sioux Falls area, Realtor Daniel Brunz confirmed the trend, observing increased interest from buyers over the past four to six weeks. He attributes this to rates remaining consistently low enough to permeate buyers’ decision-making processes, coupled with an increase in the supply of available homes.

Buyer Patience and Market Opportunities

Despite the heightened interest and increased affordability, the market has not yet translated into a surge in home sales. Buyers are exercising greater patience, leveraging the expanded inventory to be more selective in their choices. Brunz highlighted that the power is now with the buyers, allowing them to take their time and avoid rushed decisions.

For federal employees affected by the shutdown and not receiving paychecks, there are options for relief. Malmgren advised that employees can provide a furlough letter to their mortgage servicer, who may offer a forbearance program to temporarily delay mortgage payments if needed.

Future Rate Outlook

The future trajectory of mortgage rates remains somewhat uncertain until the government reopens and labor data is released. Malmgren anticipates that if the data reveals a cooling labor market, rates could potentially lower further. Conversely, stronger-than-expected labor data might lead to a slight uptick in rates.

Regardless of short-term fluctuations, Malmgren believes the market will experience less volatility, with rates likely to settle into a new normal between 5.5 percent and 6.5 percent. This period offers a valuable opportunity for both buyers and those looking to refinance, emphasizing the importance of patience and strategic decision-making.