Government Shutdown Could Threaten Hundreds of Home Sales in Dallas This Month

The government has been fully shut down for nearly a month, and the ramifications involving Texas’ housing market could be severe. According to a new study, 40% of home closings across the Lone Star State could be at risk this month due to interruptions to a federal insurance program, and bottlenecks at the IRS and stoppages at federal mortgage lender programs could further exacerbate the problem. 

Home Abroad Inc. predicts that by the end of the month, nearly 10,000 home closings will have been affected by the shutdown due to buyers’ sudden inability to obtain federal flood protections. The brunt of that impact is being felt in Harris County, where 51% of buyers in the coastal region are required to purchase flood insurance before a deal can close. Federal flood insurance is often significantly more affordable than private policies, but the government-backed program that writes those policies has been out of office since Oct. 1.

Flood insurance can be required in landlocked areas, too, and an analysis of August 2025 home sale data and FEMA flood risk maps showed that North Texas’ housing market will likely be hurt. The next most at-risk counties are Tarrant and Dallas, where 42% of home sales are at risk of falling through. Combined, those markets are seeing 51 newly-affected home sales each day, and 1,539 sales will have been affected by the end of the month.  

There are other factors that are also hurting the housing market. A majority of low- and moderate-income Texans qualify for mortgage loans through the U.S. Department of Agriculture, and thousands could buy a home using a loan from the Department of Veterans Affairs. Both of those loan programs have been paused until the government shutdown ends, and a breakthrough in the stalemate seems unlikely anytime soon. The USDA’s mortgage program has seen a 26% drop in applications since the shutdown began, Reuters reports. 

“Our phones have gone quiet,” an Oklahoma realtor told The Hill earlier this week. “Offers aren’t being made or accepted, and showings have slowed significantly. We have one triple closing that is completely held up, waiting on a USDA buyer, and we’re now over a month into extensions. Each of these buyers has already invested thousands into earnest money, appraisals, inspections and title work, and we’re doing everything we can to keep sellers from walking away.”

The sudden stoppage in work for federal employees could also throw a wrench into plans for any in the process of buying a new home, but with 130,000 federal employees in Texas, that is unlikely to account for a significant amount of the industry’s flux. More likely, the slowing market could be a reflection of broader economic fears. 

“It’s very possible that people are jittery about the economy and that they would be equally jittery if the government was open,” Chen Zhao, an economist with Redfin, told Real Estate News. “At some point it might actually become an issue where people are saying, ‘Well, I can’t pay my bills anymore.’”