“Know Before You Owe” Blamed for Sudden Sales Slump | Bedford Real Estate

Existing-home sales dropped off considerably in November to the slowest pace in 19 months, but the National Association of Realtors said some of the decrease was likely due to the “Know before you owe” or the TILA-RESPA Integrated Disclosures rule (TRID), which took effect October 3. The rule requires lenders and service providers to provide binding estimates and final accounting of closing costs before closings take place.

Total existing-home sales fell 10.5 percent to a seasonally adjusted annual rate of 4.76 million in November (lowest since April 2014 at 4.75 million) from a downwardly revised 5.32 million in October. After last month’s decline (largest since July 2010 at 22.5 percent), sales are now 3.8 percent below a year ago – the first year-over-year decrease since September 2014. Four major regions saw large sales declines in November.

November also marked the second straight month home sales have fallen on a monthly basis. In October, home sales fell 3.4 percent to a seasonally adjusted annual rate of 5.36 million in October from 5.55 million in September but were still 3.9 percent above October 2014.

Lawrence Yun, NAR chief economist, said “Sparse inventory and affordability issues continue to impede a large pool of buyers’ ability to buy, which is holding back sales,” he 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.” Yun said the longer timeframes anticipated by the new rule pushed some closings into December.

However, most reports of TRID implementation show the new rule is having minimal impact.

According to a survey by Campbell Surveys found that the total average closing time including delays for most loan types stayed relatively level or showed only a slight increase between September and October.

“While there was apprehension about TRID, so far impacts are minor,” said Tom Popik, research director of Campbell Surveys. Popik noted that measuring the effects of TRID is still in the early stages as many more TRID-compliant transactions are scheduled to close this month.