Shutdown slows housing activity in federal worker-heavy markets

The ongoing federal government shutdown is starting to weigh on housing markets with large concentrations of federal employees, according to Realtor.com’s October Monthly Housing Report.

While national housing trends remain mostly steady, early signs of hesitation have emerged in metro areas such as Washington, D.C., Virginia Beach, Baltimore and Oklahoma City.

“At this stage, the housing market effects of the federal shutdown appear localized and modest,” said Danielle Hale, chief economist for Realtor.com. “In markets like Washington, D.C., Virginia Beach, Oklahoma City and Baltimore, where many households rely on federal employment, we’re seeing buyers take a brief step back as uncertainty persists.

“However, home prices and inventory trends in these areas continue to move in line with broader national and regional patterns, suggesting that the overall market remains steady for now.”

New listings take a hit, price dips typical

Federal employment accounts for 11% of the labor force in the D.C. metro area, 7% in Virginia Beach, 4.2% in Oklahoma City and 3.7% in Baltimore, the report shows.

Realtor.com data show that new listings dropped in October in these markets — down 13.9% in D.C., 5.1% in Virginia Beach, 1.4% in Oklahoma City and 2.4% in Baltimore.

Online home searches in those areas also fell between 8% and 12% as prospective buyers paused amid uncertainty over paychecks and job security.

Slight month-to-month price declines in several shutdown-affected metros appear consistent with typical fall cooling rather than evidence of a broader downturn.

“While the current data points to only mild, localized effects, the longer the shutdown persists, the more likely it is that these markets and potentially others with smaller shares of federal workers could see more meaningful impacts on buyer demand, seller activity and transaction timelines,” Hale said.

Home prices were mostly flat nationwide, with the median list price at $424,200, up 0.4% year-over-year. Price reductions appeared on 20.2% of listings — slightly higher than last year — as homes spent longer on the market.

The typical home was listed for 63 days in October, five days more than a year ago but roughly in line with pre-pandemic averages.

Inventory on the rise

Nationally, the number of homes for sale in October rose 15.3% from a year earlier — the 24th straight month of annual inventory gains — but growth has been slowing for several months.

Listings have now topped 1 million for six consecutive months, but national supply remains about 13% below pre-pandemic levels.

Inventory increased in all major U.S. regions — with the West rising 17.4%, the South 17%, the Midwest 12.2% and the Northeast 8.9%.

Among large metros, Washington, D.C., saw the biggest annual inventory gains at 38.2%.

“In October, homebuyers had more options to choose from, but the pace of inventory growth continued to cool after two years of steady gains,” Hale said. “Sellers are pricing with more flexibility as price cuts remain common, and homes are spending slightly more time on the market — signs that conditions are gradually shifting toward a more balanced market.”