Buying a Home During the U.S. Government Shutdown: What Charleston Buyers Need to Know

If you’re planning to buy a home during a U.S. government shutdown, the good news is that most real estate transactions still move forward, but some federally backed services can cause delays. Buyers using FHA, VA, or USDA loans may face slower processing times, while flood insurance approvals and IRS income verifications can temporarily pause certain closings. Federal employees might also experience income verification challenges if furloughed. Knowing these potential roadblocks and how to prepare for them helps you keep your home purchase on track even during a shutdown.

How is Real Estate affected during a government shutdown?

A government shutdown may sound like a political issue, but it often reaches everyday homeowners and buyers too. While real estate doesn’t stop completely, activity across the market can slow down from mortgage approvals to consumer confidence.

In a recent article by CBS News, experts explained that many real estate transactions depend on federal services, such as income verification, tax documentation, and flood insurance programs. When these services pause or operate with fewer staff, home purchases and closings can take longer than usual.

Realtor.com notes that uncertainty also plays a big role. Even if most deals eventually close, some buyers delay their plans out of caution, while sellers may wait to list until the economy feels more stable. These small hesitations can temporarily reduce housing demand and slow local markets.

According to the National Association of Realtors (NAR) recent article, prolonged shutdowns have broader ripple effects on the economy because housing makes up nearly one-fifth of U.S. GDP. Fewer transactions mean less activity for lenders, title companies, appraisers, and moving services — affecting entire communities.

In short, real estate doesn’t stop during a government shutdown, but it often moves at a slower pace. Transactions that depend on federal verification, funding, or insurance may take longer to complete, and uncertainty can influence how both buyers and sellers behave in the short term.

Which parts of a home transaction are most at risk?

A government shutdown doesn’t stop real estate activity, but it can interrupt the smooth flow of a transaction. Certain steps depend on federal systems or employees, so when those pause, here’s where problems are most likely to appear:

• Loan Closings and Funding
  

• Even if a buyer is pre-approved, final loan funding can stall if the lender can’t obtain IRS tax transcripts or verify employment through government databases.
  
  
• Some borrowers might face expiring rate locks or need extensions which can increase costs.
  
  

• New Home Purchases in Flood Zones
  

• Buyers purchasing in designated flood areas could see their closings delayed if the National Flood Insurance Program (NFIP) isn’t issuing or renewing policies.
  
  
• This affects many coastal or riverfront transactions where insurance proof is required before title transfer.
  
  

• Earnest Money and Contract Timelines
  

• When financing or insurance delays extend past the closing date, buyers risk losing earnest money if the contract isn’t updated.
  
  
• Agents usually help renegotiate extensions to protect both parties.
  
  

• Appraisals and Inspections for FHA/VA Loans
  

• Appraisers and inspectors tied to government-backed loans may face backlog issues when agencies operate with reduced staffing, delaying property approval steps.
  
  

• Title Transfers and Permits
  

• Certain title or land records that rely on federal verification, such as environmental clearance or flood certifications, may take longer to process pushing back the closing schedule.
  
  

• Market Behavior and Buyer Sentiment
  

• Beyond the paperwork, shutdowns can shake confidence. Sellers may hesitate to list, and buyers might pause major financial decisions until stability returns.
  
  
• This temporary slowdown can soften demand in some local markets, though activity often rebounds once operations resume.

Are buyers still buying during shutdowns? Historical evidence & current data

A recent Redfin survey found that roughly one in six Americans (17%) are delaying a major purchase like a home or car because of the federal government shutdown, while another 7% are canceling plans altogether. However, the majority of Americans (65%) said the government shutdown has no impact on their purchasing plans.

Roughly 56,000 U.S. home-purchase agreements were canceled in August 2025, equal to 15.1% of homes that went under contract that month. While this represents the highest August rate since records began in 2017, it also means that nearly 85% of deals are still closing.

Existing home sales in the United States stood at 4,000 thousand in August 2025, demonstrating that hundreds of thousands of transactions continue monthly even amid shutdown concerns.

This means that two-thirds of potential buyers are moving forward despite economic uncertainty, a testament to the resilience of housing demand.

Practical checklist: How to reduce risk if you’re buying a house

Buying a home during uncertain times requires extra diligence. Use this practical checklist to protect yourself and minimize risk throughout the purchase process.

1. Get Pre-Approved Early

Start your loan pre-approval as soon as possible. Conventional loans are generally less affected than government-backed loans like FHA, VA, or USDA, which can pause during shutdowns. Lenders often encourage buyers to secure pre-approval weeks in advance when a shutdown seems likely.

2. Choose Your Loan Type Strategically

If timing is critical, consider conventional financing instead of federal programs. Lenders typically continue operations, while FHA and VA loans may face backlogs due to furloughed staff.

3. Confirm Your Employment and Tax Records

The IRS and other federal agencies handle income and employment verifications, which can be delayed. Ask your lender if they have backup systems or third-party tools to confirm your data while agencies are offline.

4. Lock Your Rate Early

Interest rates may fluctuate during political and economic uncertainty. It’s advisable to lock in your mortgage rate early to avoid sudden jumps caused by market volatility.

5. Build Flexibility Into Your Closing Timeline

Work with your agent to set realistic contract dates and include contingency clauses. Allow extra time for loan approval or title processing in case of federal verification delays.

6. Maintain Clear Communication

Keep open communication with your lender, real estate agent, and title company. Frequent updates can help you spot issues early and prevent closing-day surprises.

7. Keep Documentation Updated

Submit all necessary documents quickly and ensure nothing expires during the delay. This includes pay stubs, bank statements, and insurance information.

8. Stay Patient, Not Passive

Shutdowns are temporary. Most buyers who remain patient and flexible still close successfully once government operations resume.

What Sellers Should Do

Economic uncertainty doesn't mean you should pull your listing or wait out the market. Here's how to adapt your strategy and succeed during disruptions.

Price Realistically from Day One

Overpricing is fatal during uncertain times. Analyze recent sales (not listings) from the past 60-90 days and price competitively. Well-priced homes attract multiple offers even in slow markets.

Make Your Home Stand Out

Invest in professional staging, high-quality photography, and virtual tours. Two-thirds of buyers continue searching during shutdowns—make sure your property captures their attention.

Offer Buyer Incentives

Reduce buyer hesitation by offering:

• Closing cost assistance (2-3% of purchase price)
• First-year home warranty
• Flexible closing timelines
• Upfront inspection reports

Stay Flexible and Responsive

Accommodate showings with minimal notice and respond to inquiries within hours. The buyer viewing your home today might choose a competitor's property if they have to wait.

Negotiate Strategically

Don't dismiss lower offers outright. Sometimes accepting a slightly lower price with stronger terms (fewer contingencies, faster closing) beats holding out for full price.

What Agents Should Do

Communicate Proactively

Send weekly market updates with local data, not national headlines. Share showing feedback immediately and recommend adjustments based on market response.

Reframe the Market Story

Historical data shows markets recover from shutdowns within months. Position current uncertainty as an opportunity to capture serious buyers while competition hesitates.

Maximize Digital Marketing

• Create compelling video walkthroughs and virtual tours
• Use targeted social media advertising
• Optimize listings with detailed descriptions
• Host virtual open houses to expand reach

Qualify Buyers Rigorously

Work only with buyers who have full pre-approval letters, verified down payments, and stable employment. This protects sellers from deals falling through.

Price with Precision

Create comprehensive market analyses using:

• Sales from the last 30-60 days (not 6 months ago)
• Current days-on-market trends
• Recent price reductions in the area
• Local economic factors

Set Realistic Expectations

Be honest about timelines. If properties are taking 45-60 days to sell instead of 30, tell sellers upfront. Under-promise and over-deliver.

Create Strategic Urgency

Use offer review dates to concentrate buyer activity and create competitive tension. But avoid appearing desperate—it invites lowball offers.

The Bottom Line: Should You Buy Right Now?

The government shutdown creates challenges, but it doesn't have to derail your real estate goals. The data proves it: 65% of buyers are still moving forward, and 85% of deals are closing despite economic uncertainty.

Success comes down to preparation, realistic expectations, and strategic action. History shows real estate markets recover from shutdowns within months, and those who move forward strategically often find themselves ahead of those who waited.