What the Government Shutdown Means for Austin Buyers and Sellers

Even though mortgage rates have stayed relatively steady, the ongoing federal government shutdown is creating a ripple effect across the real estate world: delays in loan processing, flood insurance renewals, and verification timelines that can slow down transactions. 

Here’s what’s happening and what to keep an eye on in Austin’s market this week.

Mortgage rates are holding for now. The 30-year conforming rate is sitting around 6.38%. So far, the shutdown hasn’t caused major movement, but it’s delaying the release of key economic data the Fed uses to guide decisions. If the shutdown continues, volatility could return.

Federal programs are feeling the pressure. USDA loans, which are commonly used in rural areas, are paused until funding resumes. FHA and VA loans may take longer to approve. Flood insurance renewals through the National Flood Insurance Program (NFIP) are also on hold, which could impact homes in flood zones. For Austin-area buyers, this mainly affects properties near creeks, rivers, or rural areas.

Closing timelines may stretch. Lenders rely on IRS tax transcript verification during underwriting, and with limited staffing at federal agencies, these services are moving slower. If you’re under contract or planning to close soon, talk to your lender about building in some buffer time.

If you’re selling a home in Austin, local demand remains strong: buyers are still active, and well-priced homes are moving. However, some buyers using government-backed loans like FHA, VA, or USDA may need more time to close. You might also see requests for flexibility on closing dates or contract extensions if a buyer’s lender experiences delays. None of this should derail a transaction, but being proactive makes all the difference. My advice for sellers: stay flexible with closing timelines, confirm buyer loan types early, and position your property competitively. Homes with conventional financing or outside flood zones will likely experience fewer disruptions.

For buyers, the key is preparation. If you’re planning to purchase soon, talk to your lender early and get all verification documents—like tax returns, pay stubs, and insurance—ready ahead of time. If your loan involves FHA, VA, or USDA programs, expect slower processing and discuss backup plans with your lender. Consider locking your rate sooner rather than later to protect against potential volatility. If flood insurance is required, explore private coverage options so your closing isn’t delayed. The buyers who move early and stay organized will be in the strongest position to secure the home they want, even with some short-term friction in the system.

These challenges are more about timing than market fundamentals. Austin’s demand remains strong, and well-prepared buyers and sellers are still getting deals done. It just takes a bit more coordination and foresight right now.

Moments like this are when having the right guidance matters most. If you’re unsure how this could affect your plans, reach out. I’ll help you make sense of it.