Sales Normalize, but TRID Lingers

While final sales stumbled in November, foot traffic and pending home sales suggested strength. Existing home sales have since recovered. The main impact of TRID on final sales has been to add several days to the settlement process, shifting sales to the next period. Final sales may benefit in the coming months as these diverted sales revert back. [1]

The median time-to-close rose again in December to 40.9 from 39.7 in November, 5.7 days higher than December of 2014. This year-over-year difference is an increase from 4.7 days in November. Despite the increase in time-to-close, the unadjusted pending home sales index rose to 84.1 in November compared to 80.0 a year earlier, suggesting consistent demand.

ttcThe sharp increase in time-to-close is not representative of the entire market, though. In December of 2015 21.7 percent of sales took less than 30 days for settlement, down sharply from 32.0 percent a year earlier. This share was roughly consistent with November’s reading. However, in November 33.6 percent of sales were in the 30 to 45 day range, an increase of 2 percentage points from November in the the prior two years (not shown). Likewise, the share of sales with settlements that took 46 or more days rose by roughly eight percentage points in November 2015 to 43.3 percent. Thus, roughly 10 percent of the distribution was shifted from under 30 days and spread over the other two ranges.There was a notable shift in December, though, as the share of loans in the middle tire declined two percentage points to 31.2 percent and the share taking 46 or more more days rose by nearly the same amount to 46.9 percent. This shift in distribution suggests that the majority of producers have not been affected, but nearly 10 percent of production is taking significantly longer than normal and skewing the average and median settlement time. These delays could be caused by specific producers or by particular loan issues.

distributionWhile existing home sales are back in line with pre-TRID levels the median time-to-close remains elevated. A small but significant portion of the market is driving this effect and roughly 10 percent of home buyers are paying more for rate locks and lock extensions as a result. As the process improves settlement times may shorten, causing roughly 10 percent of the market to close sooner. As a result, existing home sales could receive a modest boost.


[1] Special thanks to Danielle Hale for her thoughtful comments and to Hua Zong for his excellent analytical support.


Ken Fears, Director, Regional Economics and Housing Finance

Ken Fears is the Manager of Regional Economics and Housing Finance Policy. He focuses on regional and local market trends found in the Local Market Reports and the Market Watch Reports . He also writes on developments in the mortgage industry and foreclosures.

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