Housing Market Stalls as Government Shutdown Drags On

Just over two weeks into the federal government shutdown, housing market transactions have slowed— a trend unlikely to reverse until the stalemate in Washington, DC, is resolved.

For the week ending Oct. 11, listing and sales activity remained sluggish, reflecting buyers' and sellers’ reluctance to jump into the market at this time of uncertainty, according to the latest weekly housing market trends report from Realtor.com®. 

"Homes continue to spend more time on the market than last year, and prices remain flat, signaling higher inventory and lower competition," says Realtor.com senior economist Anthony Smith. 

Smith forecasts that overall housing transactions will decelerate until Republicans and Democrats in Congress finally come to an agreement and resume government funding. 

Parts of the country where flood insurance is required, and where the now-lapsed National Flood Insurance Program is the only option, could see closings paused altogether.

However, while the national housing market remains soft, despite mortgage interest rates holding steady, in-demand, low-inventory sections of the Midwest and Northeast continue to be robust seller's markets where buyers have to compete to get their offer accepted. 

New listings, home prices edge up

New listings were 4.6% higher last week compared to the same period last year—a modest uptick reflecting the continued hesitation of homeowners to list their properties. 

This pullback is seen in the September Monthly Housing Report data, where newly listed homes fell 1.2% year over year. 

"With the best time of year to buy approaching, buyers may enjoy more for-sale options, though long-sitting homes may be more common than fresh listings," says Smith. 

Overall inventory increased 15.1% from last year, easing weekly for the 11th consecutive week. However, last week marked the 100th straight week of annual gains in inventory, with 1.1 million listings available on the market nationwide. 

"Active inventory is growing significantly faster than new listings, an indication that more homes are sitting on the market for longer, and homeowners aren’t eager to sell," notes Smith. 

The typical for-sale home stood unsold four days longer than a year ago, hitting a median of 63 days on the market. 

"Homes are now taking about as long to sell as they did prior to the [COVID-19] pandemic," according to the economist. "As homes spend longer on the market, sellers are more likely to reduce their asking price, eager to close a sale before the end of the year."

The median list price rose 0.4% compared to the same week in 2024. However, when adjusted for home size, the price per square foot fell 0.5% on an annual basis, softening for the sixth week in a row. 

"Price per square foot grew steadily for almost two years, but the weak sales activity has finally caught up and shaken underlying home values despite stable prices," notes Smith.