WASHINGTON – Dec. 19, 2016 – It’s taking longer to go from contract signing to closing.
The time-to-close averaged 40.5 days in November 2016; in November 2015, it averaged 36.7 days, according to data from the National Association of Realtors® (NAR). NAR called the longer closing times “unexpected.”
NAR started tracking closing delays following the October 2015 implementation of new mortgage disclosure rules, known as TRID (Truth in Lending Disclosure) or Know Before You Owe. The new mortgage rules changed the settlement process by adding new closing documents and timelines. Closing times have remained elevated since the implementation of the new rules.
NAR notes that many of the loans settled in November were under contract during the busy months of September and October and suggested that the extra demand in fall contracts may have sparked some of the delays.
“These delays should ease in the coming months as refinance volume eases and as lenders continue to adapt to the new settlement process, but a longer average time-to-close may be part of the new normal,” says Ken Fears, NAR’s director of regional economics and housing finance policy.
About 32 percent of real estate professionals reported a delay to settlement, according to November’s Realtors Confidence Index. Real estate pros said the top issues sparking a delay involved obtaining financing, appraisals and home inspections. Delays to closing due to financing accounted for nearly half of all delayed contract settlements. However, delays due to appraisals have been on the rise in recent months, partially due to a shortage of appraisers.
Source: “Closing Delays Rise Unexpectedly,” National Association of REALTORS® Economists’ Outlook blog (Dec. 13, 2016) and REALTORS® Confidence Index (November 2016)
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Source: Florida Realtors Feed