As it turns out, all of those negative Nellies and harbingers of end times over TRID weren’t completely wrong. In November’s Realtors Confidence Index from the National Association of Realtors, home sales sunk 11 percent for the month following a 4 percent decline in October.
“Compared to a year ago, market activity improved. Sustained job creation, the low interest rate environment, and measures to reduce the cost of borrowing and make credit more accessible to responsible borrowers continue to bolster the housing market recovery,” the report states. “However, the implementation of the TILA/RESPA Integrated Disclosure (TRID) regulations on October 3, 2015, appears to be delaying the settlement of contracts and impacting sales. About 47 percent of respondents reported longer closing times compared to a year ago, up from 37 percent in the October 2015 survey.”
So there’s housing demand, as jobs and consumer confidence remain lofty, but closing messes are having a negative impact on the market. I can only imagine the frustration from Realtors who are feeling the pinch from closings taking days and weeks longer than before.
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“The abrupt change in the pace of sales is out of sync with demand indicators on realtor.com and point to other likely factors causing a unique short-term disruption to closings, which the sales data represent,” said realtor.com Chief Economist Jonathan Smoke. “The good news is that we should see the closing disruptions dissipate over December and January as the delayed closings turn into an increase in sales for subsequent months.”
But doesn’t the market usually slow down in the winter? Yes, but not by this much. However, cash sales from investors are up 27 percent, so many still believe there is money to be made in real estate. First-time homebuyers are holding steady at 30 percent of the market, but condo purchases are sluggish due to financing hurdles.
“In addition, tight supply continues to be the norm with inventory down 2 percent relative to last year. Overall supply remains very tight, now at an estimated 5.1 months. This is the 39th straight month of supply under 6 months,” Smoke added. “Even with the disruption in closings, the non-seasonally adjusted estimated number of existing home sales in November was flat to last November. Due to the tight supply, the year-over-year price appreciation remains above average at 6 percent.”
What are you seeing in your neck of the woods? Is TILA/RESPA affecting you?
