The Fed kept interest rates higher for months due to economic uncertainty caused by Donald Trump's tariff policies. This directly increased borrowing costs for consumers on credit cards, car loans, and variable-rate mortgages, creating a tangible financial impact from political actions.

A critical, non-obvious consequence of a shutdown is the suspension of the National Flood Insurance Program. Because this insurance is mandatory for many mortgages, the inability to issue new policies directly stalls approximately 1,300 home sales each day, creating a significant bottleneck in the real estate market.

While furloughed federal employees are typically guaranteed back pay after a shutdown, government contractors are often not. These individuals, who perform similar work without the same protections, face a permanent loss of income, highlighting a significant and often overlooked inequity in how shutdown risks are distributed.

The difference in home price trends between US regions is not about weather or jobs, but housing supply. States in the South and West that permit widespread new construction are seeing prices fall, while "Not In My Backyard" (NIMBY) states in the Northeast and Midwest face shortages and rising prices.

Housing scarcity is a bottom-up cycle where homeowners' financial incentive is to protect their property value (NIMBYism). They then vote for politicians who enact restrictive building policies, turning personal financial interests into systemic regulatory bottlenecks.

Shutdowns halt the release of key data like jobs reports and inflation figures. This obstructs the Federal Reserve's ability to make informed interest rate decisions, creating market uncertainty. It also delays Social Security COLA calculations, impacting millions of retirees who rely on that data.

Unlike most countries that fund legislation upon passing it, the U.S. Congress passes laws first and separately debates funding later. This fundamental disconnect between approving work and approving payment is a structural flaw that repeatedly manufactures fiscal crises and government shutdowns.

With high interest rates freezing the existing home market, homebuilders are successfully competing by using their own margins to "buy down" mortgage rates for customers. This strategy allows them to continue selling inventory even when affordability is broadly challenged.

A significant cause of today's housing inventory shortage is that homeowners are locked into low-interest mortgages. "Portable mortgages," which are being actively evaluated by the FHFA, would allow homeowners to transfer their existing mortgage to a new property, removing the financial disincentive to move and potentially unlocking market liquidity.