The government shutdown, now in its third week, is pinching the housing market – but just a little.
A key index of home builders’ optimism slipped to 55 this month from 57 in September, the National Association of Home Builders said Wednesday. The survey was conducted during the first 10 days of the month.
But that was a relatively small drop. The latest reading is still close to the highest level since early 2006, and analysts say the paralysis in Washington has had less of a hit on the market than some feared – so far, anyway.
One worry was what would happen with furloughs at the Federal Housing Administration, which insures about a quarter of all single-family home purchases. Though some delays have been reported, private insurers have stepped up to offer quicker approvals and to accept paperwork that was meant for FHA loans, said Celia Chen, a housing analyst for Moody’s Analytics.
Nor has the limited staffing at the Internal Revenue Service hampered activity much, said David Crowe, chief economist of the home builders group. In some cases, lenders are using other sources to confirm income data, he said. And Fannie Mae and Freddie Mac are letting lenders put off IRS verification.
As long as Congress resolves the debt-ceiling problem and reopens the government soon – and hopes of a deal were rising Wednesday – “I think we’ll be back on an upswing, because the fundamentals are still there,” Crowe said.
Though constrained by weak job and income growth, as well as fairly tight credit conditions, the outlook for the housing market is fairly good. Confidence has generally picked up amid rising home prices, low mortgage rates and solid underlying demand. And the population has continued to grow, and many people put off moves or purchases during the recession and slow recovery of recent years.
Business in the first half of October was as good as it’s ever been, said Raymond Gaster, a Savannah, Ga.-based supplier of lumber and other goods to home builders. Still, the past few years of political and economic turbulence has taught him to be cautious.
“There’s no certainty on anything,” he said. “You take it a day, a week at a time. Trying to predict a quarter or six months out is almost impossible.