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- The National Association of Home Builders sounded the alarm on the risks of a government shutdown.
- If the National Flood Insurance Program isn't renewed, 1,300 home sales will be affected daily.
- The NAHB also warned on a shutdown's impact on home values and consumer confidence.
The federal government's impending shutdown could significantly disrupt housing market activity, the National Association of Home Builders said on Tuesday.
In a letter to Congress sent Tuesday, the industry group urged lawmakers to extend the National Flooding Insurance Program before a potential shutdown, as the policy is set to expire on Saturday.
Lawmakers would be unable to renew the program after a shutdown, which looks increasingly likely as Congress has yet to pass a spending bill with the Sunday deadline looming.
A NFIP lapse would impact around 1,300 property sales each day, NAHB wrote, especially in areas where flood insurance is required when obtaining a mortgage. Home values and consumer confidence would also take a hit, while homeowners currently under NFIP would be unable to renew their insurance, the group added.
"To this end, we urge Congress to consider the effects of a government shutdown on federal programs that directly support the construction of new housing, help buyers or renters access housing, or provide federal permits that may be required for construction," NAHB said.
Almost 5 million homeowners currently rely on the program, spanning 20,000 communities, the National Association of Realtors said separately earlier this week. Claims on existing coverage would continue to be paid out, as long as funding lasts. In early September, the program held $3.8 billion for this purpose.
If the shutdown lasts, homeowners and renters may end up foregoing flood insurance, or turn to the private market, insurance company AM Best predicted.
A shutdown would also impact Federal Housing Administration loans, with the Department of Housing and Urban Development unable to process Title I or home equity conversion mortgages.
"With each day the shutdown continues, we can expect an increase in the impacts on potential homeowners, home sellers and the entire housing market. A protracted shutdown could see a decline in home sales, reversing the trend toward a strengthening market that we've been experiencing," the HUD wrote.