Rising Home Prices Lead to 10.5% Hike in Closing Costs
October 13, 2021
Home buyers are paying more in closing costs, but it’s mostly because they’re paying more to buy a home. Lenders are actually holding their closing costs down, a new report shows.
National average closing costs for single-family properties was $6,837 including taxes, and $3,836 excluding taxes, for the first half of 2021, according to ClosingCorp, a residential real estate closing data firm. Closing costs were up 12.3% and 10.5%, respectively, year over year.
Refinance closing costs rose to $2,398, a 4.87% increase compared to 2020, according to ClosingCorp data.
ClosingCorp’s calculations include lender’s title policy, owner’s title policy, appraisal, settlement, recording fees, land surveys, and transfer tax.
“In the first half of 2021, buyers faced significantly higher home prices,” says Bob Jennings, CEO of ClosingCorp. In June, the average national price reached a new high of $373,664 and July marked the highest year-over-year gains, he adds. “Although the average home price increased by nearly $45,000, the closing costs, excluding taxes, on the property only increased by $400. In fact, closing costs as a percentage of purchase prices declined this year, going from 1.06% of the transaction in 2020 down to 1.03%. So, in addition to keeping up with high demand, the mortgage industry is doing a good job in holding down the costs it can control.”
The highest average closing costs, including taxes, for 2021 so far are in:
- District of Columbia: $30,352
- Delaware: $17,831
- New York: $17,582
- Washington: $13,910
- Maryland: $12,056
On the other hand, the states with the lowest closing costs, including taxes, are:
- Missouri: $2,102
- Indiana: $2,193
- North Dakota: $2,321
- Kentucky: $2,356
- Wyoming: $2,510
Updated: January 21, 2022