How the Government Shutdown Could Affect Housing and Home Building

The ongoing shutdown of certain federal government functions will affect housing and home builders. 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. And over the coming weeks, the shutdown could merge with the issue of raising the debt ceiling, which could have very significant impacts on interest rates, as well as monetary and fiscal policy.

Compiled by NAHB, the following is a list of government programs that could affect home builders and housing stakeholders under the current shutdown.

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.
  • Section 8 Project Based Rental Assistance Contracts, rent supplement, Section 236, and PRACs with permanent or indefinite authority or multi-year funding will have payments made from budget authority available from prior appropriations or recaptures.
  • No Real Estate Assessment Center (REAC) inspections.
  • CDBG, HOME and other block grant funds will be dispersed in cases where failure to address issues result in a threat to safety of life and protection of property.
  • Authorized drawdowns for approved CPD program activities (homeless assistance programs, CDBG, HOME, HOPWA) using pre-FY2014 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 draw down.

Department of Agriculture

  • Most Rural Development programs will not continue without appropriation.
  • The Section 521 Rental Assistance, Section 542 Rural Housing Vouchers, and Single Family Section 502 Guaranteed Loans will continue until funding is exhausted.
  • A shutdown of more than two weeks is likely to have a significant impact on rural development programs.

Department of Homeland Security

  • E-Verify, the Internet-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 will not be able to access their E-Verify accounts.  More details on how this could impact your company’s operations can be found here.

Small Business Administration

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

Occupational Safety and Health Administration

  • With the exception of “imminent danger” to life or property and other emergency situations, OSHA’s investigation and enforcement activities will cease during the shutdown.

Department of the Interior

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

Environmental Protection Agency

  • Businesses that file the Clean Water Act National Pollutant Discharge Elimination System permit 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 has been put on hold. Updates to Energy Star qualified product lists and release of draft Energy Star specifications will also be delayed.

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.

Economic Data

  • Due to the shutdown, the August Census construction spending report was not published. The important monthly jobs report for September from BLS is unlikely to be published. And future reports on items like housing starts and new home sales could also be postponed.

In general, expect delays for any housing-related federal government programs that are still operating and plan accordingly. NAHB continues to closely monitor the situation, and we will keep you posted on any new developments.

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30 Responses to How the Government Shutdown Could Affect Housing and Home Building

  1. trevormaat says:

    This is a great summary. I really appreciated it. Let’s hope for a short shut-down!

  2. Tony McLaughlin says:

    Great post. I hope the government remembers what happens when housing is effected. I would hate to see the momentum that has been generated lost by their actions.

  3. […] to check it out on how this shut down is affect the housing market, mortgages, and home building: http://eyeonhousing.wordpress.com/2013/10/02/how-the-government-shutdown-could-affect-housing-and-ho… – it is by “Eye on Housing” which is a fellow WordPress blogger like […]

  4. Reblogged this on Kentucky First Time Home Buyer Mortgage Loan and commented:
    rural development loan, government shutdown

  5. rural development loan, government shutdown

  6. […] respect to economic improvement. Adding to this is the uncertainty associated with the shutdown of the federal government. Besides the direct impact from lost or delayed government services, the shutdown is also a warning […]

  7. Manual Gonzalez says:

    Question is how long does the shut down run. If it runs one to two week, the impact will be little. If the shut down runs for months that would surely cause a delay(significant) in closing the home loan
    .

  8. Randy Noel says:

    IRS will not respond to 4506t request as well for lenders to verify tax filings by borrowers. Short term only the form is needed. Long term may delay loan approvals or closings.

  9. Tomie Raines says:

    The key question is definitely how long will the shutdown go on. Thanks for the info, here is some more info on the topic if anyone is interested – http://tomieraines.com/Blog/2013/10/07/Will-The-Government-Shutdown-Sink-Housing-Sales

  10. […] Compiled by NAHB, the following is a list of government programs that could affect home builders and housing stakeholders under the current shutdown. Read more of this post… […]

  11. […] government shutdown affects NAHB’s ability to obtain data and provide these services. The government shutdown recently forced NAHB to postpone Eye on Housing posts on construction spending, labor statistics, […]

  12. […] government shutdown affects NAHB’s ability to obtain data and provide these services. The government shutdown recently forced NAHB to postpone Eye on Housing posts on construction spending, labor statistics, […]

  13. […] government shutdown affects NAHB’s ability to obtain data and provide these services. The government shutdown recently forced NAHB to postpone Eye on Housing posts on construction spending, labor statistics, […]

  14. […] ask again, how is the shutdown of the government affecting community development? According to the National Association of Home Builders, the government shutdown is not affecting housing that much, for now. If the shutdown lasts much […]

  15. […] the government shutdown and debt ceiling debate resolved – for the next three months – it is clear that the political […]

  16. […] the government shutdown and debt ceiling debate resolved – for the next three months – it is clear that the […]

  17. […] the government shutdown and debt ceiling debate resolved – for the next three months – it is clear that the political […]

  18. […] ask again, how is the shutdown of the government affecting community development? According to the National Association of Home Builders, the government shutdown is not affecting housing that much, for now. If the shutdown lasts much […]

  19. […] the government shutdown/debt ceiling conflict resolved, at least for the next few months, it is a good time to revisit the policy debate […]

  20. […] the government shutdown/debt ceiling conflict resolved, at least for the next few months, it is a good time to revisit the […]

  21. […] the government shutdown/debt ceiling conflict resolved, at least for the next few months, it is a good time to revisit the policy debate […]

  22. […] These figures stand in contrast to other elements of the housing market that are experiencing some weakness due to softening economic conditions during the second half of 2013. These conditions were exacerbated by the economic impacts and uncertainty caused by the partial federal government shutdown. […]

  23. […] economy is beginning to emerge from the shadow of uncertainty created by the partial government shutdown of October and the temporary jump in mortgage rates earlier in the year. As a result of these […]

  24. […] economy is beginning to emerge from the shadow of uncertainty created by the partial government shutdown of October and the temporary jump in mortgage rates earlier in the year. As a result of these […]

  25. […] economy is beginning to emerge from the shadow of uncertainty created by the partial government shutdown of October and the temporary jump in mortgage rates earlier in the year. As a result of these […]

  26. […] in housing was expected due to declines in consumer confidence and the uncertainty produced by the partial government shutdown. However, the October data add more evidence that the recovery for housing will continue into the […]

  27. […] in housing was expected due to declines in consumer confidence and the uncertainty produced by the partial government shutdown. However, the October data add more evidence that the recovery for housing will continue into the […]

  28. […] consumer confidence in December, following the political drama in Washington that surrounded the partial government shutdown. Higher home prices helped, with the Federal Housing Finance Agency reporting slights gains for […]

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