U.S. Government Shutdown Affecting Housing Market

Thousands of U.S. home sales are being held up because the federal government shutdown has halted the issuance of new flood insurance policies, a move that lawmakers and a realtors lobby want overturned.

The Federal Emergency Management Administration stopped issuing new policies under the National Flood Insurance Program during the partial government shutdown, now in its sixth day. FEMA, which oversees disaster response, is part of the Department of Homeland Security.

Lawmakers from both major parties joined insurers and realtors to rebuke FEMA. Republican Senator Marco Rubio and Democratic Representative Maxine Waters on Thursday called on FEMA to resume issuing policies and renewing existing ones because on Dec. 21 lawmakers passed an extension of the National Flood Insurance Program until May 31.

FEMA’s decision, announced Wednesday, was called “abrupt and ill-conceived” in a statement by Shannon McGahn, senior vice president of government affairs for the National Association of Realtors. She said the group estimates that as many as 40,000 home closings would be disrupted for each month new flood insurance policies can’t be issued.

“I urge FEMA to immediately reconsider this harmful and incorrect interpretation of its authority and resume its important work of providing flood insurance to families across the country,” Waters, the top Democrat on the House Financial Services Committee, said in a statement.