Did TRID Really Hinder Home Sales?

Many in the industry believed that the The TILA-RESPA Integrated Disclosure (TRID) rule was the culprit behind the huge decline in existing-home sales in November 2015. The next month, existing sales recovered with the biggest month-over-month increase ever recorded. While TRID hit November pretty hard, the major gains in December may have outweighed the losses.

The National Association of Realtors (NAR) reported that existing-home sales dropped off in November to an annual rate of about 4.76 million, the slowest pace in 19 months.

November’s decline represented a 10.5 percent drop from October’s downwardly revised total of 5.32 million, and the sales pace for November was the lowest since it was reported at 4.75 million in April 2014. November’s pace is now 3.8 percent lower than November 2014, marking the first time the existing- home annual sales pace declined year-over-year since September 2014.

NAR Chief Economist Lawrence Yun said the longer closing times may be delaying transactions until the following month, making the slowdown in existing-home sales for November temporary.

“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.”

After suffering a major drop in November 2015, existing-home sales turned the tables with the largest monthly increase ever recorded in December.

The National Association of Realtors (NAR) reported that existing-home sales rose 14.7 percent to a seasonally adjusted annual rate of 5.46 million in December, up from 4.46 million in November. Year-over-year, existing-home sales are up 7.7 percent, and December's jump will mark the largest increase ever.

"December's rebound in sales is reason for cautious optimism that the work to prepare for Know Before You Owe is paying off," said NAR President Tom Salomone."However, our data is still showing longer closing timeframes, which is a reminder that the near-term challenges we anticipated are still prevalent."

"That volatility was caused by the introduction of TRID disclosure requirements, which pushed some sales from November into December," said Matthew Pointon, Property Economist at Capital Economics. "But encouragingly new home sales, which were not impacted by TRID due to the timing of when new sales are recorded, also jumped by 10.8 percent month-over-month to reach their joint-highest level since the start of 2008."