A few days before Christmas, the National Association of Realtors (NAR) reported a 10.5 percent decline in existing home sales for November. NAR Chief Economist Lawrence Yun cited the mortgage industry’s new TRID requirements as the primary reason for the falling percentages stating that this result; “without a doubt was heavily impacted by new federal government rule regarding closing document situation.”
Yun had additional commentary to offer.
“Sparse inventory and affordability issues continue to impede a large pool of buyers’ ability to buy, which is holding back sales, however, signed contracts have remained mostly steady in recent months, and properties sold faster in November,” Yun told Forbes Magazine. “Therefore, it’s highly possible the stark sales decline wasn’t because of sudden, withering demand.”
Statistically speaking, it took an average of 41 days to close a mortgage loan in November, 2015, up 5 days from the 36 day average during November of 2014. TRID adds 3 days to the front end of the mortgage getting process and 3 days to the back end, leading to the assumption that TRID caused closing delays and the decline in Existing Home Sales for November, according to Yun, while Pending Home Sales is a forward looking indicator that measures signed purchase contracts and these were down 1.4 percent in August, down again 2.3 percent in September and up just 0.2 percent in October. Fewer signed purchase contracts mean fewer purchase closings otherwise known as Existing Home Sales.
“Sparse inventory and affordability issues are enough of a one-two punch to put a dent in Existing Home Sales on their own, blaming TRID for the 10.5 percent decline in November may be easy but it is misplaced,” Yun said.