"December's rebound in sales is reason for cautious optimism that the work to prepare for Know Before You Owe is paying off," NAR President Tom Salomone, broker-owner of Real Estate II Inc. said in a release. "However, our data is still showing longer closing timeframes, which is a reminder that the near-term challenges we anticipated are still prevalent. NAR advised members to extend the time horizon on their purchase contracts to address this concern, and we'll continue to work with our industry partners to ensure 2016 is a success for consumers, homeowners and Realtors alike."
Total existing home sales spiked 14.7% to a seasonally adjusted rate of 5.46 million in December.
The year also posted a 7% year-over-year increase in sales. However, NAR argues that trend won’t necessarily continue.
"Although some growth is expected, the housing market will struggle in 2016 to replicate last year's 7 percent increase in sales," adds Yun. "In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas."
Still, originators can look forward to a slight increase in business from first-time buyers.
"First-time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages," says Yun. "While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters' overwhelming interest to own a home5 should lead to a modest uptick in first-time buyer activity in 2016."
December sales suggest TRID is paying off, according to the National Association of Realtors.