As the partial government shutdown enters its fourth week, the housing market has already begun to show signs of stress.
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A survey conducted among 2,211 members of the National Association of Realtors (NAR) found that while three-quarters of respondents said contract signings and closings have proceeded without issue, 11 percent said that the shutdown impacted current clients, while another 11 percent cited an effect on prospective clients.
The most common complaint — which accounted for 25 percent of shutdown-related complications — was that a buyer decided not to go through with a purchase due to the ongoing uncertainty – even though he or she was not a federal employee.
Nearly half of non-homeowners told the NAR they hadn’t purchased a home because they could not afford to do so – another area where the shutdown could add to pain for potential homebuyers.
As previously reported by FOX Business, the shutdown has impacted the ability of some borrowers to get a loan for a mortgage. While Fannie Mae and Freddie Mac are not government agencies – and therefore will likely continue operations as normal – the Federal Housing Administration – a branch of the Department of Housing and Urban Development – has shown some signs of delay. Lower-income people tend to turn to the FHA for assistance because it offers as little as 3.5 percent down for those with a credit score of as little as 580. Lenders for a traditional mortgage prefer a score in the 700 range.
Other borrowers in small suburbs, financing homes with mortgages backed by the U.S. Department of Agriculture (USDA), are already running into challenges.
According to a survey from the NAR, of those affected by the government shutdown, 17 percent had a closing delay because of a USDA loan. Thirteen percent had a delay due to IRS income verification and 9 percent had a delay due to a VA loan.
Over the weekend, the partial government shutdown became the longest in U.S. history. The president has said it could go on for months, even years.