US housing recovery could stall if the government shutdown continues
If stand-off continues, real estate experts say it could hurt home sales as lenders won't be able to get the needed documents to process loans
A prolonged US government shutdown could deliver a substantial blow to an already softening housing recovery.
If the political stand-off lasts for weeks, it could stall sales because lenders can't use IRS documents to confirm borrower qualifications. The impasse could also threaten loans backed by agencies such as the Federal Housing Administration (FHA).
"With each passing day, the anxiety in the marketplace is building," said Stuart Gabriel, director of the Ziman Centre for Real Estate at the University of California-Los Angeles.
The FHA's staff has been greatly reduced, which may cause delays in "processing or closing of FHA-insured loans", according to the US Department of Housing and Urban Development, which oversees the agency. For now, the FHA - traditionally an insurer of loans to first-time and low-income buyers - will continue to endorse new single-family loans. The agency currently insures about 26 per cent of all single-family home purchases.
"The longer the shutdown lasts, the more serious the impact will be," a HUD contingency plan said.
Some are already feeling the pain.