FHFA’s GSE Housing Goals are Targeting to Increase Affordable Housing Opportunities for Low-income Families in 2015-2017: A REALTOR® University Speaker Series
In a presentation in the REALTOR® University Speaker Series held recently, Dr. Paul Manchester presented the affordable housing goals for the government-sponsored enterprises, Fannie Mae and Freddie Mac, for 2015-2017. FHFA’s housing goals for the GSEs pertain to increasing credit to low-income borrowers and areas for single-family homes and increasing financing for multi-family units that are affordable to low-income renters, while maintaining the financial safety and soundness of the GSEs. Dr. Manchester is the Federal Housing Finance Agency’s lead economist for the preparation of FHFA’s Annual Housing Reports, submitted to Congress in October each year. The webinar can be accessed here.
Some highlights of the single-family home purchase/refinance and multi-family unit financing goals:
1) Share of single family loans to low income borrowers: pre-set benchmark. For 2015-2017, the GSEs have a pre-set benchmark that 24 percent of their single-family home purchase mortgages in each year should be for low-income borrowers, defined as borrowers with incomes of 80 percent or less of the area median income. This is slightly higher than the 2012-2014 target of 23 percent. Although representing only a slight increase, this will improve the access to credit for low-income borrowers.
2) Share of single-family loans to low-income borrowers: retrospective market comparison. A GSE meets this goal if its performance equals or exceeds this benchmark of 24 percent or if its performance equals or exceeds the low-income share of conventional home purchase mortgages originated in the primary mortgage market during the year. This latter figure is based on FHFA analysis of Home Mortgage Disclosure Act (HMDA) data. However, this HMDA data is not released until September of the subsequent year. Thus in addition to comparing performance with the pre-set benchmark, FHFA employs this “look back” procedure in determining goal compliance. An Enterprise fails a goal only if its performance falls short of both the pre-set benchmark level and the retrospective market goal-qualifying share of the primary market. In 2013-2014, Fannie Mae met its goals to provide financing for single-family home mortgages made to low-income borrowers (highlighted in green in Chart 1). Freddie Mac missed its goal (highlighted in red), since its performance (21.8 percent in 2013 and 21.0 percent in 2014) fell short of both the benchmark level (23 percent for both years) and the market level (24.0 percent in 2013 and 22.8 percent in 2014). Based on its shortfall on this goal and the very low-income goal in 2014, FHFA is requiring Freddie Mac to submit a housing plan that will enable it to meet targets for 2016 and 2017. 3) Multi-family low income goal – For each year, 2015-2017, the multi-family goal is that each GSE provide financing for at least 300,000 units that are affordable to low income families (600,000 total). This is higher than the targets in 2012-2014 (see Chart 2). The higher target will help ease the shortage of affordable rental units. Both Fannie Mae and Freddie Mac met their goals in 2012-2014. Together, they provided financing for 674,453 units affordable to low-income renters in 2012, 581,225 units in 2013, and 536,484 units in 2014.
4) Small multifamily sub-goal. To enhance the role of the GSEs in providing access to affordable rental housing, FHFA has established a new sub-goal for the agencies to provide financing for units in small (5- to 50-unit) multifamily properties that are affordable to low income borrowers. For 2015, the goal for each Enterprise was 6,000 units (12,000 combined); this increases to 8,000 units each in 2017 (16,000 combined), and to 10,000 units each in 2017 (20,000 combined) (Chart 3).
REALTOR® University provides on-line education on real estate and other topics at the MBA and undergraduate levels. The REALTOR® University Speaker Series provides a venue to learn about and stimulate discussion of economic and real estate issues in support of NAR’s mission as the Voice of Real Estate. The Speaker Series presentations can be accessed on this webpage.
 The REALTOR® University Speaker Series on “Overview of the Final Enterprise Housing Goals in 2015-2017” was held on January 28, 2016 at the NAR Washington Office.
 Under the 2008 Housing and Economic Recovery Act, all regulation of the Enterprises, except fair housing, was transferred from HUD and OFHEO to the Federal Housing Finance Agency. FHFA is also the regulator for the Federal Home Loan Banks.
 FHFA sets the prospective target based on six factors: specified in Housing Economic and Recovery Act which transferred all regulation, except on fair housing, from HUD to FHFA: (1) national housing needs; (2) economic, housing, & demographic conditions; (3) past goal performance and effort; (4) ability of Enterprises to lead the industry in making mortgage credit available; (5) projected size of relevant primary conventional, conforming market; and (6) the need to maintain the sound financial condition of the Enterprises.
 For more information about the GSEs’ performance, see FHFA’s 2015 Annual Housing Report at http://www.fhfa.gov/AboutUs/Reports/ReportDocuments/Annual_Housing_Report_2015.pdf).
In reporting on their last contract that went into settlement or was terminated over the period October–December 2015, REALTORS® reported that 33 percent of contracts had delayed settlement, according to the December 2015 REALTORS® Confidence Index Survey Report.
Among contracts that had a delayed settlement (33 percent), 45 percent had financing issues, an increase compared to the share of about 40 percent in the first half of 2015. REALTORS® reported that the “Know Before You Owe”/TRID regulations have led to longer closing periods. In the December 2015 survey, 53 percent of respondents reported that they are experiencing a longer time to close compared to a year ago, up from 37 percent in the October 2015 survey when NAR first gathered this information.
Among contracts that were terminated (seven percent), 29 percent had financing issues and 29 percent had home inspection issues.
 The “Know Before You Owe”/TRID regulations that took effect on October 3, 2015, were intended to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage for which they are applying.
In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members “For the last house that you closed in the past month, how long was it on the market from listing time to the time the seller accepted the buyer’s offer?”
Nationally, properties sold in December 2015 were typically on the market for 58 days compared to 66 days one year ago (54 days in November 2015; 66 days in December 2014, according to the November 2015 REALTORS® Confidence Index Survey Report.
Fewer days on the market are an indication that inventory remains tight. Short sales were on the market for the longest time at 86 days, while foreclosed properties typically stayed on the market for 68 days. Non-distressed properties were typically on the market for 57 days.
Properties typically sold within a month in the District of Columbia, Utah, and Colorado. In the oil-producing states of North Dakota, Montana, Kansas, and Louisiana, which are undergoing slower job growth following the collapse of oil prices, properties stayed on the market longer at 60 days. In Wyoming, properties typically sold after 90 days on the market. Texas appears more resilient to the oil price collapse, as properties typically sold after 45 days on the market. Diversity in the Texas economy may explain this phenomenon. Local conditions vary, and the data is provided for REALTORS® who may want to compare local markets against the state and national summary.
11 Respondents were asked “For the last house that you closed in the past month, how long was it on the market from listing time to the time the seller accepted the buyer’s offer?” The median is the number of days at which half of the properties stayed on the market. In generating the median days on market at the state level, we use data for the last three surveys to have close to 30 observations. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations.
- The number of workers starting a period of unemployment is on the rise. The U.S. Department of Labor reported that in the week ended January 30, 2016 285,000 claims were filed, an increase of 8,000 from the previous week’s level. Some of the increase may be due to weekly volatility, but even four-week moving average which strips out the weekly volatility shows an increase in jobless claims (Chart 1). In the four weeks of January 9 – 30, an average of 284,750 workers filed unemployment insurance claims, an increase compared to 263,000 claims filed in October 2015.
- The uptick in the number of claims filed appears to be associated with the steep fall in oil prices, plunging from about $100 per barrel in 2012-2014 to about $32 in January 2016. This has led to a cutback in jobs and investment spending in the oil-producing states of Texas, Oklahoma, Louisiana, North Dakota, West Virginia, Wyoming, and New Mexico (Charts 2). In the fourth quarter, the economy expanded at a slower pace of 0.7 percent as spending across most sectors declined, save for residential investment which grew at a healthy pace of 8.1 percent (Chart 3).
- Given the headwinds coming from falling oil prices, NAR projects existing home sales of 5.34 million in 2016, a modest increase from the 5.26 million existing homes sold in 2015.
 West Texas Intermediate, spot price.
Buyers who are 34 years old and under accounted for 27 percent of home sales in December 2015, according to the December 2015 REALTORS® Confidence Index Survey Report.
The participation of buyers who are 34 years and under has remained essentially unchanged since the housing market’s breakout recovery in 2012. Income growth has lagged behind the increase in house prices, making it harder to qualify for a mortgage and save for a downpayment, especially for someone with student loans. Buyers 35 to 55 years old accounted for nearly half of sales, while buyers 56 and over represented 24 percent of home sales. Older buyers are more likely to have better credit profiles and the savings or home equity to use as downpayment than younger buyers.
Nationally, buyers 34 years and under accounted for 28 percent of all buyers in calendar year 2015. Younger buyers comprise a larger portion of the residential market in Utah (39 percent), Pennsylvania (38 percent), New York (36 percent), Ohio (35 percent), Illinois (36 percent), and Colorado (33 percent).
 Federal Reserve Board, Survey of Households and Economic Decision-making, October 2014. Among renter respondents, 50 percent reported they do not have the downpayment to purchase a home, and 28 percent reported they cannot qualify for a mortgage. See http://www.federalreserve.gov/econresdata/2014-report-economic-well-being-us-households-201505.pdf
Either way you look at it, buyers know that commuting costs are high. Some buyers need to be closer to their job while others need to be close to school districts. The National Association of REALTORS® releases its annual report Profile of Home Buyers and Sellers Report to understand the trends of buyers and sellers. One trend we found fascinating in 2015 was the emerging importance of commuting costs. We cut the data and found 30 percent of respondents purchased homes this year to reduce commuting costs as they cited this factor as being very important to them.
We segmented this group further and found that 64 percent of buyers purchased their home so that it was convenient to their job, which was the most important factor in selecting a neighborhood. Of this group, 23 percent cited that they compromised on the price of their home to be geographically closer to work and thus have more free time for friends and family. What is also interesting to note is that this group was also made up of 40 percent first-time home buyers, compared to the 32 percent of all buyers that purchased a home this year.
The median age for this group was 39 years old; they bought homes with three bedrooms, two bathrooms, and were typically 1,900 square feet. The median income was $82,000 and the median home price purchased was $212,000.
So how does this compare to other buyers? We segmented married couples that had children under 18 living at home because it was similar in size as a subgroup, which comprised 34 percent of all buyers. Forty-three percent of this group cited that the distance to schools was the most important factor in selecting a neighborhood. Twenty-seven were first-time buyers, closer to the overall median, and these homes were typically larger with four bedrooms and two bathrooms at 2,200 square feet. The median age for this group was 36 years old; they bought homes with median income of $100,000 and the median home price purchased was $260,000.
The data also indicates that once families had kids, living closer to schools took priority over living closer to work. When segmented for children living at home, respondents reported that they actively compromised on the distance from their jobs more than any other group (18 percent with kids at home, compared to 13 percent of all buyers and 10 percent with no kids at home).
This year marks the 130th anniversary of Groundhog Day, and this morning Punxsutawney Phil did not see his shadow at the annual celebration. This means that an early spring is predicted this year. Looking back at existing-home sales in 2015, sales in March showed the first significant increase month-to-month. Starting in March of 2015 existing-home sales stayed above 5,000,000 through the end of October. With an early spring to come this year can we expect this home sales trend to continue?
Note: These headline figures are seasonally adjusted figures.
- Existing-home sales increased 14.7 percent in December from one month prior while new home sales rose 10.8 percent. These headline figures are seasonally adjusted figures and are reported in the news. However, for everyday practitioners, simple raw counts of home sales are often more meaningful than the seasonally adjusted figures. The raw count determines income and helps better assess how busy the market has been.
- Specifically, 438,000 existing-homes were sold in December while new home sales totaled 38,000. These raw counts represent a 25 percent gain for existing-home sales from one month prior while new home sales increased 12 percent. What was the trend in the recent years? Sales from November to December increased by 7 percent on average in the prior three years for existing-homes and 3 percent for new homes. So this year, both existing and new home sales outperformed compared to their recent norm.
- Annual figures show that existing-home sales increased 6.5 percent in 2015 from a year ago while new home sales dropped 14 percent. In raw counts, 5,256,000 existing-homes and 499,000 new homes were sold in 2015.
- Why are seasonally adjusted figures reported in the news? To assess the overall trending direction of the economy, nearly all economic data – from GDP and employment to consumer price inflation and industrial production – are seasonally adjusted to account for regular events we can anticipate have an effect on data around the same time each year. For example, if December raw retail sales rise by, say, 20 percent, we should not celebrate this higher figure if it is generally the case that December retail sales rise by 35 percent because of holiday gift buying activity. Similarly, we should not say that the labor market is crashing when the raw count on employment declines in September just as the summer vacation season ends. That is why economic figures are seasonally adjusted with special algorithms to account for the normal seasonal swings in figures and whether there were more business days (Monday to Friday) during the month. When seasonally adjusted data say an increase, then this is implying a truly strengthening condition.
- What to expect about home sales in the upcoming months in terms of raw counts? Independent of headline seasonally adjusted figures, expect slower activity in January for existing-home sales. For example, in the past 3 years, January sales typically dropped by 22 to 32 percent from December. However, activity gets better in February and existing-home sales typically increased by 4 to 5 percent from January. For the new home sales market, the raw sales activity in January tends to be better than that occurring in December, and activity gets even better in February. For example, in the past 3 years, January sales rose by 6 to 14 percent from December while February sales rose by 6 to 15 percent from January.
Approximately 15 percent of REALTORS® reported that their last sale was for investment purposes (16 percent in November 2015; 17 percent in December 2014), according to the December 2015 REALTORS® Confidence Index Survey Report.
Nationally, sales for investment purposes comprised 14 percent of residential sales in calendar year 2015. Purchases for investment purposes made up a larger portion of sales in Florida (22 percent), South Carolina (19 percent), California (18 percent), and Nevada (17 percent).
Purchases for investment purposes have declined since 2012 as rising home values led to fewer sales of distressed properties. At their peak in 2012–2013, investment sales were approximately 20 percent of residential sales.
- Economic growth was feeble in the final quarter of 2015, rising only 0.7 percent. One bright spot, however, was the housing sector, which through new home construction and rising home sales drove housing investment to rise by 8.2 percent. It will be the housing sector growth that will keep the U.S. economy to avoid recession and growing, albeit, sluggishly in 2016.
- Breakouts by specific sectors are as follow:
- Consumer spending grew by 2 percent
- Business spending did not grow
- Residential investment grew by 8 percent
- Government spending rose by 1 percent
- Exports fell by 2 percent
- Imports rose by 1 percent
- Business inventory grew, reflecting more production than sold items
- The combined total GDP grew by 0.7 percent.
- For the year as a whole in 2015, GDP expanded by 2.4 percent. This would mark the 10th consecutive year of subpar economic expansion of being less than the historical normal growth rate of 3 percent. A direct financial consequence of multiple years of slow economic growth versus what the economy would be had the economy only been normal (rising 3 percent a year), is a $1.7 trillion shortfall in national income. With 320 million people living in the country, it translates into roughly a $5,000 per person per year shortfall. The resulting economic anxiety can fuel populist demand for outside-of-establishment political candidates to get traction and votes.
- Aside from the slow 2015 GDP growth, the economy woke up on the wrong side of bed in 2016. GDP growth is expected to be even slower, rising only 1.0 to 1.5 percent in 2016. Fortunately, it is the growth in new home construction and the resulting income generations that will keep the U.S. from avoiding a recession. Slow growth is still a growth and will lead to about 1.5 million net new job additions this year.
- As an aside, there are some activities that we consume for free that are not counted in GDP. Technology has permitted us to enjoy many free internet contents and YouTube videos. These free activities do not generate income and hence are not part of GDP accounting. Nonetheless, we can take some consolation that few additional enjoyments are added to life despite slow economic expansion.
For the third year in a row, the percent of first-time home buyers in the pool of all home buyers has decreased to a historical low number, according to The National Association of REALTORS® Profile of Home Buyers and Sellers Report released in November 2015. In 2012, the percent of first-time home buyers was 39 percent of all buyers and in 2015 it was down again to just 32 percent. In the western region of the United States, it was as low as 26 percent and highest in the Northeast region at 46 percent.
Diving into the demographics of first-time home buyers, we see that over time the median age has held steady at 31 years for five years in a row since 2011. Millennials aged 25-34 years have comprised the largest share of first-time home buyers at roughly 50-60 percent in the last decade. In 2015, Millennials accounted for 58 percent of first-time home buyers compared to 50 percent ten years earlier in 2005. By way of comparison, repeat buyers were almost spread evenly around 20 percent in most age groups except Millennials and those over 75 years old last year (see table below for comparison).
What’s more interesting is the fact that the percent of first-time home buyers varies largely across the country. In the Mountain region of Montana, Idaho, Wyoming, Nevada, Utah, Arizona, Colorado, and New Mexico, first-time home buyers were only 21 percent of the total number of buyers in 2015, the lowest of any other region. They were also a low 25 percent in the East South Central. First-time home buyers made up 43 percent in the Middle Atlantic in New York, Pennsylvania, and New Jersey; and 42 percent in New England.
Buyer demographics also saw huge differences between household compositions for first-time buyers. Unmarried couples made up the largest first-time home buyers at 57 percent compared to married couples who accounted for only 27 percent. Both single males and single females accounted for 39 percent of first-time home buyers as well, well above the 31 percent of all buyers.
*In NAR’s annual survey, the questionnaire asks respondents “Was this your first home purchase?” First-time home buyers are defined solely by answering yes to this question.
- Applications for purchase mortgages rose 4.6 percent for the week ending January 22nd after a 1.6 percent decline in the prior week. Despite recent volatility, the 4-week moving average remains 21.3 percent stronger than the same time last year.
- Applications to purchase homes swung dramatically in wake of the implementation of TRID, but have since gained traction. More recent end-of-year volatility has also given way to steady growth relative to last year.
- The 4-week moving average, a means of smoothing this weekly volatility, sat at 21.3 percent stronger than a year earlier. While this was a decline from the 25.7 percent year-over-year gain from a week earlier, the measure is robust relative to last year’s late January strength.
- The gains were concentrated in the conventional sector which jumped 5.5% compared to a 2.7% gain in the conventional space.
- The average contract rate on a 30-year fixed slipped 4 basis points higher to 4.02 percent. Rates have fallen steadily from 4.20 percent just four weeks ago, but are 19 basis points higher the 3.83 percent average this time last year. Despite the increase rates remain historically low and FHA’s fees are much lower aiding affordability.
- This week’s improvement is likely to concede ground next week due to snow-related delays in the South, Mid-Atlantic, and southern New England regions. However, purchase applications should pick up thereafter.
- Buyer sentiment suggests sustained interest and a drop in actual doors opened isn’t necessarily contradictory. Rather, this pattern likely reflects the sharp drop in available inventory in December. Price growth and withering negative equity will help to generate nascent trade up activity, but additional inventory is needed to maintain turnover and to arrest strong price growth.
- Home sales of newly constructed homes rose solidly in December. The latest tally is the second highest monthly sales pace in nearly eight years. The annual total is the best in nearly a decade. The gain also affirms the continuing housing recovery and one key reason as to why the U.S. economy will avoid recession in 2016.
- Specifically, new home sales rose 10.8 percent from the prior month after accounting for seasonal adjustments. Moreover, the sales were higher by 9.9 percent from one year ago. The sales pace of 544,000 is the second highest monthly tally since 2008. Despite the seemingly impressive figures, it is also worth noting that new homes of 800,000 to 900,000 had been the norm before the housing market bubble and crash. Therefore, there is still a plenty of room to grow.
- The median price of newly constructed homes was $288,900. This is lower than a year ago, but reflects not depreciation in home price but rather homebuilders’ focus in recent months on the starter home market. The price for the year as whole set a new record of $293,600 in 2015, a gain of 3.8 percent from one year ago.
- The price of existing home has been rising faster in recent months, but the gap between new home price and existing home price still remains wider than normal. Since homebuilders have to account for the cost of labor, materials, lot purchase, and some profits there is not much room for the newly constructed home price to fall. This means, existing home prices need to rise at a faster rate for the foreseeable future to narrow the price gap back to historical normal.
- Homebuilders are finding buyers fast – about 3 months. Yet, the puzzle remains as to why the homebuilders cannot quickly ramp up production. The accessibility of construction loans from community banks continues to be a struggle because of many new financial regulations. Also, even for those who are able to get the loan, finding qualified construction workers have been very difficult despite the high wages. This trend begs the question as to why there are so many people of working age not in the labor force when the construction industry needs them.
The share of first-time home buyers increased slightly to 32 percent of residential sales in December 2015 (30 percent in November 2015; 29 percent in December 2014), according to the December 2015 REALTORS® Confidence Index Survey.
Nationally, sales to first-time home buyers were 31 percent of residential sales in calendar year 2015, essentially unchanged since 2012, the breakout year of the housing market recovery. First-time buyers made up a larger share of the residential market in New York (49 percent), Pennsylvania (41 percent), Illinois (40 percent), New Jersey (40 percent), Massachusetts (38 percent), and Georgia (37 percent). Compared to 2012, first-time homebuyers accounted for a smaller share of the market in California (32 percent) and Washington (31 percent) in 2015, likely on account of the steep price increases since 2012 as well as the preference to rent among young workers who tend to be more professionally mobile early in their careers.
Sustained job creation and the low interest rate environment are sustaining housing demand, but lack of supply, decreased affordability, and difficulty in qualifying for a mortgage are keeping many first-time homebuyers off the market.
 Federal Reserve Board, Survey of Households and Economic Decision-making, October 2014. Among renter respondents, 50 percent reported they do not have the downpayment to purchase a home, and 28 percent reported they cannot qualify for a mortgage. See http://www.federalreserve.gov/econresdata/2014-report-economic-well-being-us-households-201505.pdf
Market conditions vary across local markets and states, but the REALTORS® confidence and traffic indices indicate generally unchanged market activity in December 2015 compared to November 2015. Compared to December 2014, market activity slightly improved, according to the December 2015 REALTORS® Confidence Index Survey Report.
Sustained job creation and the low interest rate environment appear to be sustaining housing demand, even as the lack of inventory and tight underwriting standards are constraining market activity. However, in oil-producing states, homebuying demand appears to be easing. The TILA/RESPA Integrated Disclosure (TRID) regulations, commonly known as “Know Before You Owe,” which came into effect on October 3, 2015, appear to have lengthened the closing period: about 53 percent of respondents reported longer closing times compared to a year ago, up from 37 percent in the October 2015 survey. It typically took 40 days to close a sale, up from 36 days in July 2015 when NAR started collecting this information in the survey.
The share of first-time home buyers rose slightly to 32 percent of sales. Purchases for investment purposes accounted for 15 percent of sales, while distressed properties made up eight percent of sales. Cash sales accounted for 24 percent of sales. Properties were typically on the market 58 days nationally compared to 66 days a year ago, an indication that supply remains tight relative to demand.
Tight inventories, decreased affordability, and more stringent credit standards continued to be reported as key issues affecting sales, especially to first-time homebuyers. The collapse in oil prices is also a concern among REALTORS® in oil-producing states. Still, respondents were broadly “strongly” confident about the overall outlook for the next six months, especially in the single-family homes market, with the confidence index registering at 72 (50 indicates a “moderate” outlook). Local conditions differ, but respondents typically expected home prices to increase 3.3 percent.
- Job losses continue to decline in 2016. The number of unemployment insurance claims filed in the first three weeks of January 2016 averaged 284,410, a decrease compared to previous years. The average number of jobless claims filed is also below 300,000, a level that is indicative of the normal churning of the job market.
- But although job losses have declined nationally, states that are being buffeted by the drop in oil prices are experiencing job losses and net job declines. Based on the latest available data from January-November 2015 (Table 1), the number of workers filing unemployment insurance claims rose in Louisiana, Oklahoma, North Dakota, New Mexico, Texas, West Virginia, and Wyoming. The number of claims rose to 1.24 million in January-November 2015, or 139,562 more claims compared to the number of filings in the same period in 2014. Nationally, the number of claims filed decreased by 1.46 million.
- Job losses (reflected in the number of unemployment insurance claims filed) can be offset by job creation. But as the latest November 2015 data indicates, payroll employment also declined in the oil-producing states except in Texas and New Mexico (Table 2). The hardest-hit state is North Dakota, where payroll employment contracted by 14,000 in November 2015 compared to a year ago. Only Texas appears to be weathering the oil prices collapse, with the economy gaining 179,000 net new jobs. Nationally, the economy generated 2.5 million more jobs in 2015 compared to 2014.
- Given the headwinds coming from falling oil prices, NAR projects that the economy will grow at a modest pace that will support 5.34 million of existing home sales in 2016, an increase from the forecasted 5.2 million existing homes sold in 2015.
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. 
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.The 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.
While 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.
 Special thanks to Danielle Hale for her thoughtful comments and to Hua Zong for his excellent analytical support.
The official Existing-Home Sales are released tomorrow, Friday, January 22, 2016. However, savvy REALTORS® and real estate analysts know that some real estate data is already available from local sources.
What do these early December numbers tell us? In most of these areas, prices and sales were up for December (from one-year ago). For more details, visit the original source at the link listed below.
Are early stats available in your area? What does the market look like?
Source Link:Colorado http://www.coloradorealtors.com/wp-content/uploads/2016/01/CAR-Colorado_MMI_2015-121.pdf Greater Seattle (NWMLS) http://www.northwestmls.com/index.cfm?/News–Information Metro District CO http://www.coloradorealtors.com/wp-content/uploads/2016/01/CAR-Colorado_Metro_MMI_2015-122.pdf Charlotte http://apps.carolinarealtors.com/files/Local%20Market%20Update%20Dec%202015.pdf Oklahoma City http://www.okcmar.org/wp-content/uploads/2016/01/Dec_2015_Press_Release.pdf Ada County Idaho http://publicstats.intermountainmls.com/static/Reports/Ada/2015/December-2015-Ada.pdf Spokane http://www.spokanerealtor.com/mls/market-snapshot
Martin Luther King, Jr. Day is observed on the third Monday of January and marks the birthday of Rev. Dr. Martin Luther King, Jr. This holiday is also recognized as a day of service, and is an opportunity to serve your community. Based on the 2015 Member Profile we can see how REALTORS® are volunteering in their community.
- Seventy percent of all REALTORS® volunteer in their community, and the typical REALTOR® who volunteers is 56 years old.
- Twenty-four percent of REALTORS® aged 65 and older volunteer in their community.
- Fifty-nine percent of the REALTORS® volunteering are females, and 41 percent are males.
- The South showed the highest percentage of volunteers at 39 percent, followed by the West at 31 percent, the Midwest at 17 percent, and the Northeast at 14 percent.
- Thirteen percent of volunteers were fluent in a language other than English.
- REALTORS® who previously had a career in the management, business, or financial field were more likely than any other previous career to volunteer (19 percent).
Find more information on Martin Luther King, Jr. Day and opportunities to volunteer in your area at: http://www.nationalservice.gov/mlkday
View the Martin Luther King, Jr. Day infographic.
For more highlights on REALTORS® view the 2015 Member Profile.