The average closing costs for a single-family home increased 12.3% during the first six months of 2021, according to a report published this week by analytics vendor ClosingCorp. And significantly higher home prices were the culprit.
According to ClosingCorp, the average closing costs nationally came in at $6,837 including taxes and $3,836 excluding taxes. The report also found that refi closing costs increased by 4.87% to $2,398 from the reported 2020 average of $2,287.
But things are not always as they seem. Bob Jennings, CEO of ClosingCorp, said that closing costs as a percentage of purchase prices actually declined this year to 1.03% from 1,06% in 2020.
“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,” Jennings said.
He also added that in June, the average national price hit $373,664 and in July “leading home prices indices registered their highest ever year-over-year gains.”
In the wake of this unparalleled volume, companies across the housing industry have been working to increase the efficiencies of the entire lending process – including getting closings correct the first time around. Here’s a look at the future of error-free closings.
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“Although the average home price increased by nearly $45,000, the closing costs, excluding taxes, on that property only increased by $400,” he added.
The report also shows that states with the highest average closing costs, including taxes, were District of Columbia ($30,352), Delaware ($17,831), New York ($17,582), Washington ($13,909), and Maryland ($12,056).
Meanwhile, states with the lowest closing costs, including taxes, were Missouri ($2,102), Indiana ($2,193), North Dakota ($2,321), Kentucky ($2,355) and Wyoming ($2,509), the report said.
In order to come to these conclusions, the tech vendor “analyzed data on more than 1.9 million single-family purchase transactions that ran through [their] ClosingCorp Fee platform,” said Dori Daganhardt, chief data officer at ClosingCorp.
“We are reporting ‘market-specific’ rates and fees not just network averages charged by the most active settlement services providers in each geographic area,” Daganhardt said.
ClosingCorp also noted in their report that it uses home price data from CoreLogic to estimate closing costs at the state, core-based statistical area and county levels.
In June, CoreLogic announced that it entered into a definitive agreement to acquire all outstanding shares of ClosingCorp.
The transaction was expected to close in the third quarter of 2021, however since then, no updates have been made public.