When the federal government closes, real estate feels it first.

Behind every sale, mortgage, or permit are government-backed systems that make homeownership possible. Flood insurance, FHA and VA loans, rural housing programs, and federal verifications all rely on staff and systems that stop or slow when Washington grinds to a halt.

On a recent episode of The Advocacy Scoop, NAR’s Shannon McGahn and Patrick Newton explained what really happens during a shutdown and how REALTORS® help keep the market steady when uncertainty rises.

A Modern Habit Washington Cannot Shake

Government shutdowns were not always part of the American budget cycle. Before the 1970s, if Congress failed to pass spending bills, federal agencies kept operating, assuming new funding would arrive soon. That changed in 1980 when a Justice Department ruling made it illegal for agencies to spend money without congressional approval.

Since then, shutdowns have become a regular feature of politics. McGahn called it “a reality, not a new one, but a consistent one.”

When Congress fails to pass all twelve annual appropriations bills, parts of the government lose legal authority to operate. To avoid this, short-term fixes known as continuing resolutions are sometimes used to buy time. But when those expire, the shutdown begins.

The Real Estate Ripple Effect

Few industries depend more on the federal government than real estate. Housing transactions are heavily regulated and insured, and that means any disruption quickly reaches buyers and sellers.

“Even if some functions continue, uncertainty slows deals,” McGahn said. “That is why we talk directly with lawmakers. Behind every delayed form or policy renewal is a family waiting to move.”

During a shutdown, the Federal Housing Administration, which insures about 15 percent of U.S. mortgages, faces reduced staffing. Loan processing slows, affecting first-time and lower-income buyers most. VA loans usually continue, but veterans often see delays in eligibility checks or customer service. Rural housing loans through the USDA stop entirely, halting transactions in many smaller communities.

The National Flood Insurance Program is another major concern. It has been kept alive through short-term extensions since 2017, often tied to broader spending bills. When the government closes, its authorization lapses unless Congress acts. Without it, tens of thousands of home closings in flood zones could stall, threatening roughly 1,400 transactions every day.

Existing policies remain valid for 30 days and can be transferred to new owners, but uncertainty spreads quickly. “It is not that everything stops on day one,” McGahn said. “But the longer a lapse lasts, the harder it becomes for people to close on their homes.”

Builders, Renters, and Confidence

The impact extends beyond buyers. Builders and developers face delays when they need federal permits or environmental reviews. HUD rental assistance payments can be held up, leaving housing providers waiting for funds. FHA condo approvals slow down, which affects new supply and development.

Even short shutdowns cause bottlenecks. Longer ones can ripple through markets for months, changing mortgage rates and shaking investor confidence.

Consumer confidence is often the hardest to protect. “Come and use this government program, but the government is shut down,” McGahn said. “That is a hard sell.”

REALTORS® as Advocates

NAR’s advocacy team prepares for these moments long before they happen. When shutdowns threaten, they launch immediate outreach to Congress through the Federal Political Coordinator network, mobilizing members across every district. Within 48 hours of this shutdown, NAR reached 70 percent of lawmakers to explain how the closures affect homebuyers and local economies.

That outreach has sparked bipartisan attention. Lawmakers from both parties have voiced support for keeping critical housing programs open. Behind the scenes, NAR continues meeting with White House officials and housing regulators to keep the focus on one goal: protecting access to homeownership.

Because when Washington closes its doors, the housing market still turns, and REALTORS® still show up for the people trying to move their lives forward.