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The TRID effect is real: Existing-home sales fall sharply in November

Closing delays pushing sales into December?

First there was anecdotal evidence that the implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures rule in October had caused issues with the housing industry, but now, concrete data is beginning to show just how much the impact of TRID is being felt – and the news isn’t great.

Last week, the latest Origination Insight Report by Ellie Mae showed the average time to close a loan increased by 3 days during the month of November to 49 total days, making it the longest time needed to close a loan since Feb. 2013.

And according to the latest report from the National Association of Realtors, those closing delays helped considerably slow down existing-home sales in the month of November.

According to NAR’s latest report, the total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 10.5% to a seasonally adjusted annual rate of 4.76 million in November.

Existing-home sales cooled to the slowest pace in 19 months during November, NAR’s report showed, to the lowest seasonally adjusted annual rate since April 2014 when it was 4.75 million.

This it the second month in a row that existing-home sales have fallen. In October, total existing-home sales decreased 3.4% to a seasonally adjusted annual rate of 5.36 million.

After last month’s decline, which NAR said was the largest since July 2010 at 22.5%, existing-home sales are now 3.8% below a year ago, which is the first year-over-year decrease since Sept. 2014.

According to NAR Chief Economist Lawrence Yun, the decline is not entirely due to TRID, but TRID certainly isn’t helping.

“Sparse inventory and affordability issues continue to impede a large pool of buyers’ ability to buy, which is holding back sales,” Yun said. “However, signed contracts have remained mostly steady in recent months, and properties sold faster in November. Therefore it’s highly possible the stark sales decline wasn’t because of sudden, withering demand.”

NAR’s report also showed extended closing times, which Yun said may be pushing sales out into December, with the hope being that closings are just being delayed, not disappearing entirely.

According to NAR’s Realtors Confidence Index report, 47% of respondents in November reported that they are experiencing a longer time to close compared to a year ago, up from 37% in October.

“It’s possible the longer timeframes pushed a latter portion of would-be November transactions into December,” says Yun. “As long as closing timeframes don’t rise even further, it’s likely more sales will register to this month’s total, and November’s large dip will be more of an outlier.”

According to NAR’s report, single-family home sales dropped 12.1% to a seasonally adjusted annual rate of 4.15 million in November from 4.72 million in October, and are now 4.6$ lower than the 4.35 million pace a year ago, NAR’s report showed. The median existing single-family home price was $221,600 in November, up 6.6% from November 2014.

Existing condominium and co-op sales increased 1.7% to a seasonally adjusted annual rate of 610,000 units in November from 600,000 in October, and are now 1.7% above November 2014 (600,000 units). The median existing condo price was $211,400 in November, which is 4.7% above a year ago.

NAR’s report also showed that the median existing-home price for all housing types in November was $220,300, which is 6.3% above Nov. 2014, when it was $207,200.

November’s price increase marks the 45th consecutive month of year-over-year gains, NAR said in its report.

Additionally, total housing inventory at the end of November decreased 3.3% to 2.04 million existing homes available for sale, and is now 1.9% lower than a year ago, when it was 2.08 million. Unsold inventory is at a 5.1-month supply at the current sales pace, up from 4.8 months in October, NAR’s report showed.

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