How the 2025 Government Shutdown Could Affect the Housing Market 

The federal government officially entered a shutdown on October 1, 2025, after Congress was unable to agree on a funding bill. While headlines are focusing on politics in Washington, many people are asking a practical question: What does this mean for me if I’m thinking about buying or selling a home?

The short answer is that the housing market doesn’t stop, but the shutdown can cause delays and create a little uncertainty. Let’s walk through what you can expect.

Mortgage Loans and Closings

For many homebuyers, mortgages are where the biggest effects will show up.

• FHA and VA loans: Because these are government-backed programs, processing may slow down during the shutdown. FHA case numbers, loan guarantees, and endorsements can be delayed. VA loans may continue to move, but often at a slower pace.

• USDA rural loans: These usually pause altogether in a shutdown, since the USDA doesn’t have the funding to keep the process running.

• Conventional loans: These tend to move forward, but they sometimes rely on government systems (like IRS transcripts for income verification). If those systems are unavailable, lenders may not be able to finalize approvals right away.

If you’re under contract, this doesn’t necessarily mean your deal is off—it just means there could be a delay in getting to the closing table.

IRS and Income Verification

Most mortgage lenders require proof of income through IRS transcripts. During a shutdown, the IRS suspends non-essential services, and this can create a bottleneck. Buyers with straightforward income might not feel it as much, but self-employed borrowers or those with complex returns may face slower approvals.

Buyer Confidence and Timing

Beyond the technical side of loans, there’s also the question of confidence. News of a shutdown can make buyers and sellers hesitant.

• Buyers may pause their search, especially if they work for the federal government or are contractors facing a temporary loss of income.

• Sellers might decide to wait before listing, worried that there will be fewer qualified buyers during the shutdown.

In the short term, this can mean fewer showings, slightly longer days on market, or contracts falling through if financing stalls.

Local Effects in Our Area

Because Maryland and the surrounding D.C. metro region have a large number of federal employees, we tend to feel the impact more directly than other parts of the country. Missed paychecks or furloughs can reduce buyer activity temporarily.

That said, it’s important to keep in mind that demand for housing here remains strong, especially in popular communities like Ellicott City, Columbia, Crofton, and Odenton. Even if there’s a short-term slowdown, the long-term outlook is still steady because inventory remains limited.

The Bigger Picture

If the shutdown is brief, the impact will likely be small: mostly delays and a bit of hesitation in the market. If it drags on for weeks, the economic ripple effects could become larger, slowing housing activity more noticeably.

Interestingly, mortgage rates can sometimes dip during shutdowns because investors move money into safer bonds when uncertainty rises. Lower rates could actually help affordability if the shutdown doesn’t drag out too long.

What This Means for You

• If you’re selling: Don’t panic. Homes are still selling. The key is to price strategically and understand that some buyers may move a little slower right now.

• If you’re buying: Stay in close touch with your lender. Ask them how the shutdown could affect your specific loan type and be prepared for a little more patience in the process.

Final Thoughts

The government shutdown adds a layer of uncertainty, but it does not stop the housing market. For most buyers and sellers, the biggest issue will be timing, not whether a home can sell or close.

If you’re considering a move, the best step is to stay informed and work with a professional who understands both the local market and how national events like this might affect your plans.