Closing times are lengthening. The time-to-close averaged 40.5 days from November 2015 to November 2016 compared to 36.7 days the year before, according to data from the National Association of REALTORS®. NAR called the longer times in closing “unexpected” in a recent blog post.
NAR began tracking closing delays following the implementation in 2015 of new mortgage disclosure rules, known as TRID 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 points out that many of the loans that settled in November were under contract during the busy months of September and October. 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,” notes 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, the appraisal, and home inspection. 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, the report notes.