How the Government Shutdown Will Affect Housing

Advocacy

Published Oct 01, 2025

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The White House and Republican and Democratic congressional leaders failed to reach an agreement to extend government funding on Tuesday, resulting in a shutdown of most federal government functions at 12:01 a.m. on Wednesday, Oct. 1, that will affect housing and home builders.

It is unclear how long the shutdown will remain in effect. In most cases, the short-run impacts will be minor. A long-run shutdown, lasting several weeks or a month or more, could have significant impacts on mortgage accessibility and reduce housing demand.

In general, NAHB members should expect delays for any housing-related federal government programs that are still operating and plan accordingly. NAHB continues to monitor the situation closely and is calling on federal lawmakers to act quickly to reach an agreement to fund the government.

National Flood Insurance Program

Of immediate concern is the effect on the National Flood Insurance Program (NFIP):

The authority to provide new flood insurance contracts is expired for the duration of the government shutdown. This will delay all new home sales or insurance renewals for property owners with federally-backed mortgages who lie in a Special Flood Hazard Area.
This disruption could lead to significant uncertainty in the housing market and may result in the cancellation of sales. However, flood insurance contracts entered into before Oct. 1 will continue until the end of their policy term of one year.

While Congress has reauthorized the NFIP retroactively following most prior lapses in authorization that have occurred, there is no guarantee that it will do so in this instance. A failure to retroactively renew the flood insurance program will impact the effective date of policies that can be issued once the NFIP has been reauthorized and once again begins issuing new policies.

The Trump administration has not published updated contingency plans for agencies late Tuesday evening, and has signaled likely furloughs or reductions in federal workforce as a result of the shutdown. Compiled by NAHB, the following is a list of government programs that could affect home builders and housing stakeholders under the current shutdown. The list below is based on government plans and actions currently available or on previous shutdowns, but is subject to change based on administration actions. NAHB will continue to update this list as new information becomes available.

Department of Housing and Urban Development

FHA-insured single-family loans will continue to be endorsed in the near term, although some delays in processing and closing should be expected.
FHA multifamily insured projects with firm commitments and scheduled closings may go forward, although no new firm commitments will be issued.
HUD will make payments under previously obligated Section 8 contracts, Section 236 agreements, Section 202 and 811 Project Rental Assistance Contracts (PRAC), and Section 811 Project Rental Assistance (PRA).
HUD will continue to process rental subsidy contract renewals to the extent that there is budget authority available from prior appropriations or recaptures.
NSPIRE physical inspections will only proceed a) when the servicing mortgagee is responsible for procuring the inspection; b) when funds for the NSPIRE inspection contracts were obligated before the lapse in appropriations; or c) where there is reason to believe that there is a threat to life or property at a specific location.
CDBG, HOME and other block grant funds will be dispersed in cases where failure to address issues results in a threat to life, safety and protection of property.
Authorized drawdowns for approved CPD program activities (homeless assistance programs, CDBG, HOME, HOPWA) using pre-FY2026 program funds will continue uninterrupted unless it is necessary for a HUD employee to approve a voucher or lift a system edit prior to a drawdown.

For more specific information about HUD’s operations, see the “HUD Contingency Plan for Possible Lapse in Appropriations 2025.”

Department of Agriculture

Most rural development programs will not continue without appropriation.
The Section 521 Rental Assistance Program payments from obligations before the lapse will continue.
No new rural housing loans, grants or loan guarantees will be committed during a shutdown. For Section 502 guaranteed loans only, lenders and borrowers can choose to proceed with closing if USDA has already issued a valid conditional commitment.
Disbursements of construction loans and grants will continue during a shutdown.
A shutdown of more than two weeks is likely to have a significant impact on rural development programs.

For more specific information about USDA’s operations, see the “USDA Lapse of Funding Plan.”

Department of Homeland Security

E-Verify, the web-based system that allows businesses to determine the eligibility of their employees to work in the U.S., is unavailable due to the government shutdown. While E-Verify is unavailable, employers may not be able to access their E-Verify accounts.

Small Business Administration

The SBA will not initiate new loan guarantees during the shutdown.

Occupational Safety and Health Administration

OSHA’s investigation and enforcement activities will be substantially reduced during the shutdown, with the agency focusing on “imminent danger” situations involving the threat of safety, life or property and other emergencies, such as catastrophic and fatal workplace accidents.

Department of Labor

The agency will likely stop processing employers’ foreign labor certifications to access temporary workers under the H-2B program.

Department of the Interior

Businesses that seek permits from the Fish and Wildlife Service could be affected. New permits or applications under review will not be processed during the government shutdown, which will increase costs and delays.

Environmental Protection Agency

Businesses in states where EPA is the primary permitting authority may notice a delay in issuance of their stormwater permits. These states are Idaho, Massachusetts, New Hampshire and New Mexico, along with the District of Columbia.
The ENERGY STAR program is shut down until further notice, and the processing of all partner applications and partner inquiries is on hold. Updates to Energy Star qualified product lists and release of draft ENERGY STAR specifications will also be delayed.

U.S. Army Corps of Engineers

Businesses seeking permits under the Clean Water Act or approved jurisdictional determinations will be affected. New permits or applications under review will not be processed during the government shutdown, as the Pentagon has not designated these activities as exempt from suspension once funds have lapsed.

Internal Revenue Service

Some lenders require home borrowers to file IRS form 4506-T to verify the mortgage applicant’s income and Social Security number. With the IRS shut down, this could result in major delays in some mortgage application approvals.
Taxpayer services will be suspended, meaning no refunds will be issued and taxpayers will not be able to phone the IRS for advice.