FILE PHOTO: U.S. Capitol building during the continuing partial federal government shutdown on Capitol Hill in Washington, D.C., U.S., October 8, 2025. REUTERS/Jonathan Ernst/File Photo

WASHINGTON (Reuters) -A shutdown of the U.S. government could hinder the accessibility of insurance coverage to prospective homeowners in flood-prone areas, and cost the already struggling housing market billions of dollars in delayed contract closings, data showed on Tuesday.

The report from HomeAbroad, a real estate investment technology platform, estimated that about 3,619 home closings were at risk nationwide daily, translating to roughly a loss of $1.59 billion based on the current $439,278 median home price.

The National Flood Insurance Program, which helps to provide coverage for properties in high-risk areas, has suspended services during the shutdown, now entering its third week. Numerous government services have been impacted by the shutdown, which was triggered by a lapse in funding amid a political standoff between Republicans and Democrats in Washington.

"This represents the largest potential disruption to the U.S. housing market from a single policy intervention in recent history," said Michele Lawrie, real estate consultant at HomeAbroad. "The economic scale of this shutdown extends far beyond individual homebuyers."

The housing market has been battered by higher mortgage rates as the Federal Reserve hiked interest rates to curb inflation. Though mortgage rates have declined as the U.S. central bank resumed lowering borrowing costs last month, an uncertain economic outlook marked by a lethargic labor market has sidelined many prospective homeowners.

HomeAbroad projected that a two-week-long shutdown would put 50,658 home closings at risk, with an estimated economic loss of $22.27 billion. A one-month-long shutdown was seen threatening 108,570 home closings, costing an estimated $47.68 billion. The longest government shutdown was in 2018-2019 and lasted 35 days.

"A shutdown of similar length today could potentially delay over 126,000 home closings, threatening more than $55 billion in housing market transactions, illustrating the high stakes involved," said Lawrie.

HomeAbroad estimated eight states including Maryland, Virginia, North Carolina and Florida, could see more than half of their home sales disrupted as they were highly vulnerable because of elevated flood insurance penetration rates.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)